Container shipping

Top 10 container shipping companies 2021 EBIT to beat all records

543 views

The top 10 publicly listed container shipping companies are on track for a record $115 billion to $120 billion in profit in 2021. The prediction is based on estimated Q4 earnings derived from company forecasts together with shipping intelligence provider Alphaliner estimates.

“The 10 lines have already generated nearly $80 billion in EBIT in the first nine months of the year,”
Alphaliner said.

Taiwanese container shipping lines posted the largest profits due to their heavy exposure to the lucrative trans-Pacific trade lanes.

Taipei-headquartered Evergreen Marine, which operates 34% of its fleet in the trans-Pacific market, reported an EBIT of 67% of its revenue in the third quarter of 2021. Keelung-based Yang Ming reported an EBIT of 66% of its revenue, followed by Taipei-headquartered Wan Hai at 61.5%.

“The ‘tail’ on the container boom has continually defied forecasts with several players initially predicting that the boom would peter out after the 2021 Chinese New Year,” Alphaliner said.

The largest container shipping companies operate more of their fleet on shipping routes outside the Pacific and have lower exposure to the spot market. Germany’s Hapag-Lloyd reported a third-quarter EBIT of 46.5% and devoted just 12% of its fleet to trans-Pacific trade lanes.

Denmark’s A.P Moller Maersk, the largest shipping company in the world since 1996, similarly recorded a third-quarter operating margin of 46.1% was only allocating 15% of its fleet to the Asia-to-North America market.

Switzerland-based Mediterranean Shipping Corporation (MSC) which is is privately held and does not release its financial reports is the second-biggest shipping company behind Maersk.

container shipping
(Source: Alphaliner)

The structure of the shipping industry could be transformed as those record earnings are reinvested
with liners pursuing different strategic goals, according to Alphaliner.

Evergreen and MSC are focusing on expanding their fleets. MSC  is all set to overtake Maersk Line, as the world’s largest container line, when looking at the aggressive strategies of MSC which has a pile of big deep-sea vessels in its orderbook.

Hapag-Lloyd and French shipping and logistics group CMA CGM are paying down debt. Maersk is expanding beyond ocean freight into inland logistics. Another result of the windfall earnings of shipping lines will be the privatization of South Korea’s flagship liner operator HMM in 2022.

With over 44% of HMM’s stock, the government is the controlling shareholder, and its interest is held through Korea Development Bank (KDB) and Korea Ocean Business Corporation (KOBC), both state-controlled policy lenders.

South Korea‘s vice-minister of oceans and fisheries Eom Ki-doo told journalists last month the government hoped to find a buyer for the once-embattled shipping line by the end of March 2022.

The likely buyer would be one of the country’s conglomerates as overseas buyers are not eligible.

The head of the state-run KDB Lee Dong-gull warned the process must be gradual. “To make the sale easier, it is desirable for the largest shareholder to sell its stake to the market in phases,” Yonhap news agency quoted him as saying.

The KDB took over HMM, formerly known as Hyundai Merchant Marine, in 2016 effectively saving it from bankruptcy. In 2020, HMM posted profit for the first time in 21 quarters.

In the third quarter of this year, the company’s net income jumped more than 90-fold as freight rates continued to rise.

“HMM is now aiming to become part of the select group of ‘super carriers’ with fleet capacity above 1 million TEU” Alphaliner said.

With reporting by Alphaliner, Platts, Yonhap