When the global supply chain suffers, freight rates increase. Freight rate refers to the price or cost of transporting goods from one place to another. When supply chain shortages hit, freight rates hit all-time highs while port congestion and capacity shortages continued to provide challenges to the biggest shipping companies in the world. The disruption led to 67% of CEOs stating that they would invest further in processes that would improve disruption detection and innovation, thus allowing such companies to be more proactive, according to KPMG, reports Insider Monkey.
Freight rates
However, the second half 0f 2022 saw a huge decrease in freight rates, with Maritime Strategies International analyst Daniel Richards said “A high proportion of contracts will come up for renewal in the first half of next year, and it’s clear that the lines are going into that renewal season, not on a great footing. Blank sailings aren’t yet proving to be as effective at all as they were in the early stages of the pandemic. So now the spot rates have led, it’s likely the contract rates will follow.”
Meanwhile, Maersk also mentioned the fall in spot rates in its Q4 2022 earnings call, stating “While we had anticipated a steep normalization in the ocean market — freight in the ocean market freight rates for the second half of 2022, this was accompanied by a steeper than expected decline in volumes with import volumes into North America and Europe from Asia falling in the mid 20s percentage due to inventory corrections at large retailer and lifestyle brands……. Naturally, the effect of the drop in the spot rate is having a profound effect across the industry during the annual contract negotiations and we expect our average 2023 contract rates to eventually move towards prevailing spot rates.”
As global trade continues to increase, the impact and importance of the biggest shipping companies in the world continues to increase massively as well. This is why if you compare to the previous statistics in our article on the biggest global logistics and shipping companies in the world, you will note that most of these companies have grown. One of the biggest impacts on global supply chain was due to one of the biggest trading countries in the world in China remaining shut down well after most countries across the world had opened up post-Covid, as China attempted to engage in a zero-Covid policy that backfired spectacularly.
Finally, at the end of 2022, China abandoned this policy and has started to open up, which is expected to help unclog Chinese shipping routes, which incidentally is also home to some of the biggest ports in the world. This will result in reduced strain towards supply chain though there is a fear that this transition will not be smooth, which could lead to short-term pains, and provide further growth impetus for the biggest shipping companies in the world.
Of course, in the past one year, it is impossible to talk about global shipping and not discuss the impact of the Russia-Ukraine war. Europe had been looking to get quickly back on track after the latest lockdowns imposed because of the Omicron Covid-19 variant ended in early 2022, only for Russia to invade Ukraine which resulted in a war that has been going on for over a year now with no near end in sight. Western nations immediately imposed sanctions on Russia, one of the biggest oil and gas exporters in the world, which unsurprisingly piled on more pressure on the already fragile shipping industry.
Another factor impacting supply chain right now, and probably will continue to have a major impact throughout 2023 and maybe even beyond, is the threat of a recession. While it seems that most of Europe will avoid a recession, and the impact on the U.S. may not be as significant as initially feared towards the third quarter of 2022, many countries will not be so lucky and even in economies where there isn’t any contraction in GDP, growth rates will be much lower as compared to 2022, which means industries will slow down and demand will be lower, thus impacting the shipping industry.
The biggest shipping companies in the world are continuing to grow their fleet, which may become an issue since demand is expected to slowdown in 2023, though it is also expected to rebound in 2024. According to Maritime Strategies International analyst Daniel Richards, trade growth, as we discussed earlier, is likely to slow down because of inventories already overbuilt, while the housing market is facing pressure because of the increased cost of borrowing, with interest rates continuing to jump up.
Meanwhile, inflation has put significant pressure on the disposable income of a household, which is also likely to negatively hurt trade in the first half of 2023. According to MSI, fleet growth is expected to by 7% year-on-year in both 2023 and 2024, and while not as high, will still be above average in 2025. Also, if the volume of scrapping is lower than expected, the growth rate could even hit double-digits.
Digital innovation is another area where the biggest shipping companies in the world are attempting to improve their development in. According to ZIM Integrated Shipping Services Ltd. (NYSE:ZIM), in its Q4 2022 earnings call “The positive development, which may benefit wave bill of lading, one of our early investment is a recent decision by the Digital Container Shipping Association, the DCSA, that was established in 2018 by most of the largest shipping companies with their objective of establishing IT standards for our industry.
Together, the founding members represent over 70% of the global container shipping trade. DCSA members recently announced their commitment to reaching 15% electronics bill of lading within five years and 100% by the year 2030. As you may recall, ZIM first introduced electronic bill of lading to its customer, so the wave bill BL solution back in 2017. And today, other major shipping companies are also offering the wave solution to their customers.”
The biggest shipping companies in the world
Finding out the biggest shipping companies in the world isn’t an easy task. You may head on over to Forbes but companies in the shipping industry are limited in their presence in Forbes Global 2000. On the other hand, trying to rank these companies based on market cap, revenue and profit is an exercise in futility, since a lot of these companies are private and information isn’t easily available. Therefore, we have calculated our rankings based on the TEU capacity of each company and the number of ships owned and chartered by the company, assigning 70% weightage to the former criterion and 30% to the latter, with all information taken from Alphaliner. So, let’s now take a look at the giants of the shipping industry, starting with:
16. X-Press Feeders Group
Total TEU of the company in 2022: 141,963
Total number of ships of the company (both owned and chartered): 90
X-Press Feeders Group, a Singaporean shipping company, reduced its North European capacity which resulted in its market share falling to 2.7% in the region.
15. KMTC
Total TEU of the company in 2022: 148,659
Total number of ships of the company (both owned and chartered): 65
KMTC is one of two Korean entries in our list of the biggest shipping companies in the world, and recorded a jump of 91% year-on-year revenue growth, crossing $3 billion in revenue.
14. Zhonggu Logistics Corp
Total TEU of the company in 2022: 146,436
Total number of ships of the company (both owned and chartered): 101
Zhonggu Logistics Corp is a Chinese company which was established over two decades ago. The company is considered to be China’s largest coastal container shipping company and entered a collaboration with logistics company Sinotrans to expands its operations intra-Asia.
13. Pacific International Lines
Total TEU of the company in 2022: 296,083
Total number of ships of the company (both owned and chartered): 90
Pacific International Lines is a Singaporean company which offers services in more than 500 locations across 90 countries.
12. SITC International
Total TEU of the company in 2022: 167,447
Total number of ships of the company (both owned and chartered): 109
SITC International has 77 service routes which covers 16 countries. Taking advantage of the container boom, SITC recorded 67% higher profits in 2022.
11. Wan Hai Lines
Total TEU of the company in 2022: 444,069
Total number of ships of the company (both owned and chartered): 135
Wan Hai Lines is a Taiwanese shipping company, which was fined nearly $1 million in March 2023 by the Federal Maritime Commission because of “failing to establish, observe, and enforce just and reasonable regulations and practices relating to its assessment of charges on containers when return locations with corresponding appointments were unavailable”.
10. Yang Ming Marine Transport Corporation
Total TEU of the company in 2022: 705,614
Total number of ships of the company (both owned and chartered): 93
The largest shipping company in Taiwan, Yang Ming Marine Transport Corporation recorded its best ever performance in 2022 in terms of revenue and net profit, with its revenue crossing $12.6 billion and achieving over $6 billion in after-tax profits. High average freight rates and strong demand were the drivers behind the incredible performance.
9. HMM Co Ltd
Total TEU of the company in 2022: 816,365
Total number of ships of the company (both owned and chartered): 75
One of the largest shipping companies in the world, HMM is a South Korean company which is partnering with several other companies to “develop, demonstrate and commercialize vessels powered by small modular reactors (SMR).” Because of strict greenhouse gas emissions regulations in the shipping sector, nuclear powered ships are becoming a more popular idea.
8. ZIM Integrated Shipping Services Ltd. (NYSE:ZIM)
Total TEU of the company in 2022: 562,140
Total number of ships of the company (both owned and chartered): 139
ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) is one of the largest companies in Israel. ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) enjoyed a better than expect Q4 2022 which resulted in its shares soaring in recent days. and cementing its position among the biggest shipping companies in the world.
7. ONE (Ocean Network Enterprise)
Total TEU of the company in 2022: 1,526,631
Total number of ships of the company (both owned and chartered): 204
The largest shipping company in Japan, ONE was only incorporated less than six years ago. In March 2023, ONE ordered 10 state-of-the-art large container vessels which will have a capacity of more than 13,700 TEU which will then be delivered in 2025 and 2026.
6. Evergreen Line
Total TEU of the company in 2022: 1,663,046
Total number of ships of the company (both owned and chartered): 209
Evergreen Line may be one of the biggest shipping companies in the world but became infamous after its ship Ever Given became stuck in the Suez Canal in 2021, preventing an estimate $9.6 billion worth of trade while the ship remained stuck. The company had to suspend all operations at Iskenderun Port after the Syria-Turkey earthquake devastated the region.
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Source: Insider Monkey
