Alphaliner: Maersk increases its margins despite the drop of its competitors

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According to Alphaliner, Maersk rises as carrier margins despite the forecasted fall below 50% of its competitors. Contrary to the industry, the Danish line shows favorable numbers in an industry that is entering economic uncertainty.

Quoting the report from Alphaliner, the average operating margins for the container industry fell for the second straight quarter in the July-September period, after the top 10 shippers reported widespread declines. Together, the 10 lines generated an average margin of 51.9% for the period, the lowest figure in five quarters. The decrease reflects both a drop in revenue due to rapidly falling freight rates, as well as the impact of rising costs, leaving lines less profitable from their commercial production.

Reflecting the drop in market freight rates, average profit per twenty-foot container equivalent fell 3% for the ten shippers in the third quarter compared to the prior three months. However, performance was not uniformly negative and four lines – Maersk (Ocean), COSCO, ONE and Hapag-Lloyd – managed to increase average earnings per teu, suggesting further success in securing lucrative contract rates, it says Alphaliner.

The transformation was particularly marked for Maersk, which at 48.5% reported the sixth highest margin, up from tenth in the previous quarter. The Danish airline switched places with Wan Hai, whose 39.5% margin was the lowest among the top 10 airlines in the last quarter, informs Alphaliner.

Excluding the four carriers, average earnings per teu fell 6.8% QoQ for the remaining 6 lines (ZIM, CMA CGM, HMM, Yang Ming, EMC and Wan Hai), and the decline in operating margins was much higher for these carriers. In addition to carrier issues, costs are also rising now and lines will inevitably face higher expenses related to bunkering, container handling, and positioning, adds Alphaliner.

According to the article, Hapag-Lloyd reported bunker costs of EUR 905m for the latest quarter, double that of a year ago and equivalent to 24% of the carrier’s freight charges. Given the geopolitical situation, energy prices are expected to remain high, which will affect carriers’ OPEX.

Furthermore, Alphaliner states that despite collapsing freight rates, the top 10 lines continue to generate phenomenal profits, with a margin implying an average return of almost 52 cents on every dollar of sales before taxes and interest, far from the low digits of a single digit that are enjoyed in past years.

According to Alphaliner, the top 10 lines have now collectively made nearly $260 billion in operating profit (EBIT) since the start of the pandemic (as of 1/4/2020), with CMA CGM narrowly surpassing Maersk for the top spot. despite its smaller size. see left table. Yet despite the massive amounts of cash carriers now hold, certain airlines will inevitably be forced to draw on these reserves to cover the likely shortfall between lower fares and expensive charter flights signed at the height of the pandemic.

Source: Alphaliner

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