- Shipping Sector Sees 164% Profit Surge in Q3, Reversing 2023 Losses
- Container Shipping Hits Largest Volume Quarter Ever in Q3 2024
- Red Sea Disruptions and Growing Demand Drive Container Shipping Profits
Seatrade Maritime reports that Container Lines has reported net profits of an impressive $26.8 billion for the third quarter of 2024, according to an analysis from John D. McCown, translating to an exponential growth period; its 164% increase from the second quarter of 2024 is more than eight times that $2.8 billion reported in the third quarter of 2023.
A reversal of 2023’s decline
The 2024 performance is starkly contrasted with the decline observed during 2023 when container lines suffered a loss of $700 million in the fourth quarter due to the easing of post-pandemic disruption. The sharp recovery in 2024 reflects higher rates and growing demand for container shipping.
Red Sea Disruptions and Cape of Good Hope Detours
The disruption in the Red Sea has been one of the major contributors to the strong rates in 2024, pushing container lines to sail ships around the Cape of Good Hope rather than through the Suez Canal. This would contribute to the rising fleet capacity being absorbed and therefore lifted higher shipping rates.
Growing Demand for Container Shipping
Container shipping demand increased in the third quarter, by 4.7% year on year, after even stronger growth in prior quarters (6.2% in Q2 and 8.2% in Q1). McCown reported that the third quarter of 2024 marked the largest worldwide volume quarter on record, supported by the highest volume increase since the pandemic.
Widespread Profit Margins Across Lines
Despite the overall high performance, there was quite a wide variation in profit margins by individual container lines. Margins ranged from 49.0% to just 17.2%, averaging 28.0%. HMM topped the margins chart, while CMA CGM recorded the lowest. European carriers were especially at the low end of the scale, reporting margins far below those for non-European operators.
ILA Labour Dispute on the US East Coast
McCown sees two potential disruptors in container shipping going into early 2025. In fact, the labour dispute with ILA dockworkers on the US East Coast is currently alive and well, at least potentially affecting operations: The ILA and the United States Maritime Alliance, Ltd. (USMX) tentatively agreed to extend the current contract to January 15, 2025, as of September, however, it’s just a shadow of hope as any escalation in the dispute might affect the supply chain.
Risk of Rising US Import Tariffs
Second, new US import tariffs could result from President-elect Donald Trump. Trump has threatened to raise to 20% tariffs the import tariffs in the US and up to 60% on Chinese goods. During his first stint in the presidency, the US and China launched a trade war resulting in tit-for-tat tariffs on anything from soybeans to chemicals.
Did you subscribe to our daily Newsletter?
It’s Free Click here to Subscribe!
Source: Seatrade Maritime
