Several container carriers book record revenue and operating result for the first quarter. High contract rates will have the earnings boom continuing into the second quarter, writes Alphaliner.
Photo: PR / Cosco Shipping
Five major container lines led by Maersk have managed to book record-high revenues and operating incomes in the year’s first quarter as compared with the preceding quarter – with a single exception.
The operating result (EBIT) of the five carriers rose by an average of more than 12% in Q1 compared to the preceding quarter, with China’s Cosco, however, being the only one whose EBIT result didn’t set a record, according to Alphaliner.
The analyst firm expects the earnings boom to continue into Q2 this year based on its examination of quarterly reports published by Maersk, Cosco, ONE, Hapag-Lloyd and Evergreen Marine.
According to Alphaliner, the reason for these record results is that even more shippers have chosen to sign long-term contracts with box carriers in 2022 compared to last year.
”A combination of sky-high spot freight rates and a severe shortage of capacity in 2021 has encouraged many shippers to sign up to new mid- or long-term contracts at significantly higher rates in 2022,” states the analyst firm.
”The trend is expected to keep revenues high for shipping lines in the second quarter even as spot rates come under pressure.”
On average, the five carriers advanced on revenue by 5% in Q1 compared to Q4 2021 despite a lower surge in spot rates of 3%, according to the Shanghai Containerized Freight Index (SCFI).
Maersk, which has upgraded its result guidance for 2022, stated during a recent press meeting that 71% of the carrier’s customers are now on long contracts.
This is expected to generate added income of USD 10bn.
Shippers to renegotiate contracts?
However, the cap on long-term customers is 80%, said Maersk Chief Executive Søren Skou on the same occasion.
”The good Q1 result combined with the fact that we to a significant degree have been able to raise prices through negotiation on our long-term contracts by USD 1,400 per FFE mean that our top line alone, due to the contract prices, increases by USD 10bn this year compared to last year,” he said during last Wednesday’s press meeting.
These numbers from Maersk and other box carriers attest to the fact that customers are still paying considerably larger sums than previously to have their goods transported around the world.
In late April, this prompted former Electrolux logistics lead Bjørn Vang Jensen, now consultant at Sea-Intelligence, to assess that ”serious talks” with customers were inbound for carriers if this trend of contract rates exceeding spot rates were to continue.
English edit: Jonas Sahl Hollænder
