Ocean carrier operational profits fell below pre-pandemic levels in the third quarter – and results for Q4 are likely to be a whole lot worse. Alphaliner’s assessment of the reported earnings before interest and tax (EBIT) of the nine largest carriers saw the average operating margin fall to 1.5% in Q3, which was lower than recorded in any of the quarters in 2019, reports The Loadstar.
Ocean carrier operational profits fell below pre-pandemic levels
At the top of the list was the Cosco Group (including OOCL) with an EBIT margin of 15.8%, a result that the consultant said was “assisted by a sweeping cost-cutting program which has reduced its expenditure”.
The Chinese state-owned group’s results were in keeping with its peers with revenue down by 60%, although unlike some of its rivals, its liftings were flat during the period.
At the bottom of the rankings was Israeli carrier Zim who, notwithstanding booking a huge $2.1bn impairment charge during the quarter, recorded an adjusted EBIT loss of $213m, for a cumulative 9M EBIT loss of $373m.
Alphaliner said that Zim was “penalized by its high exposure to the spot market” while at the same time being committed to expensive charter rates for its fleet.
“With 95% of its fleet capacity comprised of chartered-in tonnage – the highest in the industry, with most carriers usually operating a more balanced fleet of owned and chartered vessels – Zim continues to grapple with firm rates signed during the pandemic,” said Alphaliner.
For instance, Zim currently has on charter the 6,644 teu post-Panamax sister ships, the Zim Vietnam and the Zim America until March 2025, and as per the charter party, the carrier is paying a higher rate of $53,000 per day for the 20-year-old vessels to non-operating containership owner Costamare.
This compares with the current charter market, where for example CMA CGM has just fixed the 6,892 teu Buxcoast for a six-month time charter at a rate of just $25,000 per day.
Zim has 34 “expensive” chartered-in vessels due to be redelivered back to owners next year, followed by some 40 ships where charters expire in 2025, during which time it will have taken delivery of 46 newbuild long-term chartered vessels, of which 28 will be powered by LNG.
Meanwhile, heading Alphaliner’s volume growth leaderboard for Q3 was South Korea’s HMM, which recorded an 11% year-on-year increase in its liftings, followed by Japanese carrier ONE with a 7% growth, and then both Maersk and Hapag-Lloyd with their liftings both up by 5% in the quarter.
Cosco was at the bottom of the growth rankings with a zero percentage uplift in its carryings, just above CMA CGM, which increased its carryings by just 1% during the period.
CMA CGM no longer reports its results at an EBIT level and was therefore not included in Alpha Liner’s operating margin rankings.
However, the French carrier produced the second-highest EBITDA (earnings before interest, taxes, depreciation, and amortization) score of a margin of 21%, across its group activities, behind Taiwan’s Evergreen which had an EBITDA margin of 26.3% for the quarter.
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Source: The Loadstar
