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Global Supply Chain News: Record Profits just Keep on Coming for Container Carriers, with a Sector Blowout in Q1

 

 

Industry Profit Margins Now Whipping Leading Tech Stocks

 

May 24, 2022
SCDigest Editorial Staff

It remains smooth sailing for ocean container carriers, as rates stay high even as volumes slide a bit, all leading to still more record profits in the first quarter of 2022.

Supply Chain Digest Says...

 

In an interesting observation, the Q3 McCown report had noted that container sector profits in the third quarter of 2021 had exceeded those of leading tech giants.

 
 

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According to new analysis from the McCown Container Results Observer, as reported by the Seatrade Maritime web site, profits for container carriers reached $59.8 billion in the first quarter, a sixth straight quarterly record and an amazing three times what was then a record for profits in Q1 last year.

To no surprise, record carrier profits were powered by huge margins. Net income in the quarter came in at huge 45.1% of revenue, versus of still healthy margins of 25.2% in Q1 2021 and 41.8% in Q4.

Maersk Line led the way in the just ended quarter. In its Q1 earnings report released in early May, parent company Moller-Maersk saw $19.3 in revenue, a 55% increase from 2021. EBITDA more than doubled to a record $9.1 billion and free cash flow increased to a huge $6 billion.

“By any and all financial measures, the Q1 2022 results were the best actual quarterly performance by the container shipping industry in its history,” the McCown          report noted.

Those record results were also powered by extremely high rates, even though the Container Trade Statistics data showed worldwide contain volumes declined 1.8% in the first quarter, following a 1.1% fall in Q4 2021 and a 1.2% decline in Q3 2021.

But those modest volume declines are way over matched by shipping challenges, such as continued COVID lockdowns in China, that reduce effective capacity, which the report estimates is still down 13%.

In an interesting observation, the Q3 McCown report had noted that container sector profits in the third quarter of 2021 had exceeded those of leading tech giants, and the industry outperformed Facebook, Amazon, Netflix and Google in Q1 2022.


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The maritime analysts at Drewry expect the good times to continue for container carriers.

In a blog post in late March, Drewry observed that ““Recent events have not fundamentally changed our outlook for the trade and the timing of any unwinding in container supply chain disruption,” adding that “It looks like more of the same for the container market in 2022 with more disruption, extreme freight rates and [high] carrier profitability.”

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