Profitability of liner majors in the 2023 fiscal year has nearly returned to pre-pandemic levels, despite sharp year-over-year revenue declines.
The profitability of liner majors in the 2023 fiscal year is close to pre-pandemic levels, according to the data released by maritime analytics firm Sea-Intelligence.
Container shipping liners experienced exceptional profitability during the pandemic primarily due to a surge in consumer demand, and supply chain disruptions, allowing liners to increase freight rates. Moreover, capacity reductions, operational optimizations, and government stimulus further bolstered profit margins.
Nevertheless, as the market continues to normalize the profitability margin is decreasing, especially in relation to the ongoing geopolitical uncertainties.
“In 2023-FY, all shipping lines saw sharp Y/Y decline in revenues, ranging between -46.6% and -62.6%. However, the annualised revenue growth rate in 2023-FY is in line with 2018-2019, which suggests that the sharp Y/Y revenue decline in 2023-FY is an artefact of the abnormal revenue growth of 2021-2022, rather than a fundamental revenue loss in 2023,” Alan Murphy, CEO, Sea-Intelligence, said.
Container shipping companies like ZIM, Yang Ming, and Wan Hai recorded EBIT losses in 2023-FY. Four shipping lines had an EBIT of over USD 1bn, indicating that profitability levels were nowhere near those in 2021-2022.
EBIT per TEU is one way to visualise profitability. Figure 1 shows EBIT for 2010-2023 and shows the unprecedented levels of the 2021-2022 pandemic period, whereas Figure 2 cuts off the y-axis at +/- 300 USD/TEU, to show the developments in 2023.
The analysis from the company included EBIT/TEU data for 5 shipping lines (COSCO and OOCL haven’t published yet, and CMA CGM does not publicly publish EBIT anymore).
Although Maersk’s EBIT/TEU of 94 USD/TEU is significantly lower than in 2021-2022, it is still higher than most of the pre-pandemic years, whereas for Hapag-Lloyd (235 USD/TEU), it is the highest outside of 2021-2022.
Hapag-Lloyd said in its report that the figures from 2023 were the third-best result in the company‘s history. According to the report, the group EBITDA stood at USD 4.8 billion (EUR 4.5 billion). The Group EBIT experienced a year-on-year decrease to USD 2.7 billion, and the group profit to USD 3.2 billion.
ONE revealed EBIT/TEU was (116 USD/TEU), while for HMM, their 2023-FY EBIT/TEU of 119 USD/TEU was lower than in 2020 but is still better than in 2011-2019 when they were not profitable at all. ZIM’s EBIT/TEU loss of -765 USD/TEU was driven by a “non-cash impairment loss of USD 2.06bn recorded in the third quarter.
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