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LOGISTICS, TRANSPORT AND SHIPPING NEWS TRUCKING INDUSTRY NEWS
28/09/2017
The shipping companies are recovering after the market boom and already benefits.

Most container shipping lines were back in the black at the halfway stage of 2017. The recovery has been driven by much better market fundamentals and greater pricing discipline.

To some, it is a crime to be boring. That accusation could not have been levelled at the container shipping industry over the past year or so. This time last year we wrote how the majority of carriers were mired in debt with revenues collapsing faster than they could cut costs, and of course they were also dealing with the immediate fallout from Hanjin Shipping’s bankruptcy that had mainstream media asking if Christmas would be cancelled.

Fast-forward through an action-packed 12 months when the M&A bandwagon -that had already started before the market hit the bottom of the current cycle- gained even greater momentum and carriers are now finally getting their strength back and looking forward to a potentially golden era of profitability.

First-half 2017 income statements from 16 of the largest companies that make such information available shows that industry-wide revenue has gained around 18% on the same period last year, with all but four lines now reporting a profit. The swift turnaround has enabled operating margins for our sample to recover from -4.8% in 1H16 to 2.4% in 1H17. We expect the latest margin will go even higher when CMA CGM reports its results. Some caution is advised as while we try to include only the results from container operations wherever possible in some cases the results do include figures from other business units.

First-half 2017 income statements from 16 of the largest companies that make such information available shows that industry-wide revenue has gained around 18% on the same period last year, with all but four lines now reporting a profit. The swift turnaround has enabled operating margins for our sample to recover from -4.8% in 1H16 to 2.4% in 1H17. We expect the latest margin will go even higher when CMA CGM reports its results. Some caution is advised as while we try to include only the results from container operations wherever possible in some cases the results do include figures from other business units.

The industry’s return to the profitability in the second quarter was expected, but significantly it is more broad-based.
Even greater pricing discipline should prevail as more lines emerge from their own troughs, which combined with a brighter market outlook and a smaller field should ensure the recovery is more sustainable than before.

 

 

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