Lines’ average operating margins break all records

The container industry’s average operating margins are unprecedented in the history of shipping. After sifting through all of the first quarter results, the latest data from Alphaliner shows that major carriers are now generating a margin of 57.4%, compared to 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 generating nearly 70 cents on every dollar,” Alphaliner said in its latest weekly report.

Taiwan’s Evergreen was crowned the winner last quarter. He achieved an operating margin of 68.6%, slightly higher than that of his compatriot Yang Ming, which stands at 68.1%.

The 10 carriers surveyed earned a collective operating profit of $43.1 billion in the first quarter of 2022. That compares to $15.9 billion in the same period a year earlier.

Additionally, even if the spot market swings through to year end, it looks like the liners will continue to post extraordinarily strong results, based on the latest set of long-term contracts signed.

Major carriers generate 57.4% margin, compared to an average of just -0.2% in the decade before the pandemic

May saw the largest monthly increase in long-term contractual ocean freight rates since Oslo-based Xeneta began tracking such shipments, with the cost of locking container shipments soaring 30.1% .

The unprecedented rise, revealed in the latest public Xeneta Shipping Index (XSI) for the contracts market, means that long-term rates are now up 150.6% year-on-year.

By the end of 2022, the container shipping industry will have made an unprecedented operating profit of half a trillion dollars thanks to two years of supply chain difficulties and freight rates record high, according to estimates by research firm Drewry.

After making a record $190 billion last year according to Drewry’s estimates, the liner shipping industry is on track to post new highs in profits in 2022.

Reviewing the latest numbers, John McCown of Blue Alpha Capital described the shipping’s first quarter results as “breathtaking.”

The container shipping industry’s profits in the first quarter of 2022 beat those of FANG – an acronym for Facebook, Amazon, Netflix and Google – by 103%, widening the gap from the fourth quarter of last year , when the line industry’s profits exceeded those of FANG by 14%, according to analysis by Blue Alpha Capital.

McCown stuck to his original profit forecast of $220.5 billion for the container shipping industry in 2022.