Strong Demand and Capacity Shortages Drive Rates Up

Liner operators are reporting their strongest operating margins since 2010, excluding the COVID-19 boom, according to a recent report by Alphaliner. This surge is attributed to a combination of high demand and capacity limitations caused by Red Sea diversions.

Average Margins Bounce Back

The average operating margin for the container industry jumped significantly in Q1 2024, returning to positive territory. This reverses the negative trend seen in Q4 2023, which marked the industry’s first negative result in five years.

Key Takeaways:

• Liner operators’ average operating margins reach highest level since 2010 (excluding COVID).
• Capacity shortages from Red Sea diversions push freight rates up 27% compared to Q4 2023.
• Aggregate margin for top 9 operators reaches 11.4%, a major improvement from -3.8% in Q4 2023.
• Carriers’ average rates rise between 14% and 48% in Q1 2024, driven by strong demand from China.

HMM Takes Top Spot for Margins

South Korea’s HMM emerged as the leader in terms of operating margin, boasting an impressive 18.1%. This is likely due to their focus on ex-Far East trades, where they operate a significant portion (75%) of their fleet and experienced a substantial 48% increase in rates.

Maersk Lags Behind

Maersk Line, for the second consecutive quarter, finds itself at the bottom of the rankings with a negative operating margin of 2%. While they saw a 23% rise in average freight income per TEU, their volumes unfortunately dipped by 6% compared to the previous quarter.

Positive Outlook for 2024

Alphaliner’s report highlights a more optimistic outlook for carriers in 2024 compared to the year’s beginning. Maersk has revised its EBIT guidance upwards, and both Hapag-Lloyd and ZIM Line have expressed confidence in avoiding losses for the full year. These carriers are even projected to achieve some of the industry’s best returns outside of the pandemic period.

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