Positive Outlook for Container Shipping
The majority of container shipping companies lost money in the first quarter of 2017, but despite a combined operating loss of $16 million, analysts Drewry forecast positive end of year profits.
Drewry's Container Insight Weekly reports that market recovery towards an industry operating profit of around $1.5 billion in 2017 will start from the second quarter when new contracts roll over.
“Exceptionally strong demand growth in Q1, 2017, and far higher annual contract rates will create even more profitable conditions for the remainder of the year,” says Drewry.
In the first quarter, CMA CGM with an operating margin of 5.5 percent and HMM -10.1 percent. Drewry states: “The disparate set of results is perhaps the most interesting takeaway from the first reporting season of the year, showcasing how despite claims the industry is increasingly becoming commoditized there remain significant differences between companies in terms of scale, cost structures, trade coverage, customer base and spot-contract ratios.
Drewry expects more homogenization as industry mergers take effect.
The market has generally been tough for container shipping companies since 2008, as demonstrated in the Alphaliner chart below.