Container Lines Records Tremendous $28.6bn in profits in Q2

A report by the McCown Container Results Observer has revealed that 11 container lines that publicly report results made profits of $18.44billion.

The 11 lines represent 64.5 per cent of the sector in the capacity and based on the assumption that the lines, which do not publicly report had similar per cent results the total profit for the sector in Q2 2021 was $28.6 billion.

The “amazing” second quarter 2021 profitability compares to $2.2billion in the same quarter in 2020, which was in line with historical averages.

The second-quarter profit eclipses the already record-breaking first quarter of 2021 profit of $19.1bn by some $9.5 billion. In the final quarter of 2020 container shipping made a $9.1 billion profit.

“By any and all financials, the 2Q21 results were by far the best actual quarterly performance by the container shipping industry in its history,” the report published by Blue Alpha Capital said.

Revenues for the sector in the second quarter were $88.9bn equating to a net margin of 32.1 per cent. “I never actually expected to see an actual net income to the revenue margin of 32.1 per cent for any major container shipping company, let alone for the entire industry,” John D. McCown, the founder of Blue Alpha Capital said.

Placing the staggering Q2 2021 results in some historical perspective McCown noted that it was only the fourth quarter of last year that cumulative five-year sector result went into positive territory.\

 Over the last 22 quarters, the net container shipping sector result stands at $54.9 billion, on estimated revenues of $1.4 trillion, generating a net income margin of less than 4 per cent over the period as a whole.

In a related development, long-term container contract rates jump a record 28.1 per cent in July

 Last month saw a 28.1 per cent rise in long-term contracted container shipping rates, the largest ever monthly increase according to Xeneta.

Xeneta’s latest XSI Long-Term Public Indices, which uses crowd-sourced data shippers, rose 28.1 per cent in July, by far the biggest monthly rise the index has ever seen, the previous highest monthly rise is 11.3 per cent in May this year. The index is up 76.4 per cent this year, and the July number is 78.2 per cent higher than the same month a year earlier.

“This is a truly breath-taking development,” comments Patrik Berglund, CEO of Xeneta. “We’ve seen a combination of high demand, under capacity and supply chain disruption (in part down to Covid and port congestion) driving rates ever higher this year, but nobody could have anticipated a hike of this magnitude. The industry is in overdrive.”

The sharp rise in long term rates followed even steeper rises in spot container rates. For European imports spot rates jumped a massive 49.1 per cent in July, to over $13,000 per feu for Freight All Kinds (FAK), and up 120.3 per cent year-on-year.

For Asia export rates on the XSI were up 24.2 per cent in July, and 110.4 per cent year-on-year. For US imports July saw a 17.7 per cent surge in spot rates, up 61.2 per cent over July last year.

Berglund said that shippers reported lines were largely long-term contracts. “However, bear in mind that volume flexibility is gone, with shippers committing to maximum quantities to secure positions onboard. Furthermore, all around the world, but especially in the US, shippers are playing safe and building buffer agreements to ensure they’re covered for the holiday season,” he said.

 (NAN)