Shipping lines’ Operating margin increases

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Shipping lines increased their operating margins in the first quarter of 2022 compared to the last quarter of 2021, says Alphaliner.

Average operating margins for the container industry increased again in the first quarter of 2022 after eight of the top ten shipping lines improved their performance compared to the last three months of last year, adds Alphaliner.

Operating Margin &
Operating Margin & Average EBIT margin by Quarter Source: Alphaliner

Major lines now generate a 57.4% margin, down from an average of just -0.2% in the decade before the pandemic. The result indicates carriers are earning a return before interest and taxes of 57 cents on every dollar of sales, with some carriers earning nearly 70 cents on every dollar, Alphaliner reports.

According to the report, all carriers reported higher margins in the latest quarter, with the exception of Wan Hai Lines and ZIM. This contrasts with the previous quarter, when the collective result remained mainly static, at an average of 55.4% compared to 55.6% in the third quarter of 2021.

Taiwan’s Evergreen Marine Corp (EMC), which recently overtook ONE to become the world’s sixth largest line, was crowned the winner last quarter. It achieved an operating margin of 68.6%, just slightly higher than Yang Ming’s 68.1%. The two carriers have consistently reported the two strongest margins over the past five quarters, adds Alphaliner.

An increase in operating profitability was also seen at ONE, which reported a 62.0% margin for the latest quarter, the fourth highest, while Wan Hai and ZIM have seen their margins gradually decline. Hapag-Lloyd also reported a strong quarter, with a 53.5% margin, beating CMA CGM and COSCO, who had generally outperformed the German shipping line. By contrast, COSCO Shipping has seen its relative profitability decline since the start of the pandemic and was the worst performer of the major carriers, Alphaliner reports.

Now, it remains to be seen whether the latest profit margin of 57.4% marks a peak for the container industry. Alphaliner shares that in disclosing its latest results in May, Hapag-Lloyd said it expected second-quarter results to come in “lower” than the period just ended.

However, in publishing its results, ZIM confirmed that contract rates in 2022 had doubled year-over-year, raising the possibility that contract rates will offset “lower” spot rates later in the year. present, the financial results of 2022 could still exceed those of 2021.

Capacidad (Teu) vs. Utilidad Operacional (EBIT en USD Bill)
Capacidad (Teu) vs. Utilidad Operacional (EBIT en USD Bill)

The ten carriers surveyed reported a collective operating profit of $43.1 billion in the first quarter of 2022. This compares with $15.9 billion in the same period a year earlier.

Source: Alphaliner

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