When it comes to financial results, the world’s container lines sure know how to take shareholders on a wild, wild ride.
Anyone who ever questioned the cyclic nature of the global container shipping business should take a look at some of the latest liner results.
Even Maersk, the market leading, market-share chasing giant has managed to stack up some impressive revenue growth in the last quarter as the market improved.
Although “improved” doesn’t really do justice to what the market has done compared to the first quarter last year. “Spectacularly rebounded” would be a better description.
And that rebound has seen Maersk go from a US$581 million loss in the first quarter last year to a US$168 million net profit. Nice rebound if you can get it.
Maersk carried more than 20 percent more boxes in the three months, too.
Over at troubled Hapag-Lloyd the troubles are no more. In the first quarter last year, the German line managed to lose euro 222 million and had to be bailed out big time. This year it is euro 13 million in the black.
The rapid change in fortunes has extended to other carriers, even CMA CGM. We say “even” because the French line was deep in a financial hole not too long ago. The carrier predicts it will post an EBITDA of around US$380 million and carry 22 percent more containers in Q1.
Hanjin Shipping and Hyundai Merchant marine, Korea’s two major carriers, also made it back into the black in terms of operating profits in the first quarter.
Also rebounding majestically all over the balance sheet was Neptune Orient Lines, parent of APL. NOL was close enough to smudge the black ink with a fat finger but fell just US$98 million short. Still, it is a far better position to be in than the red drenched US$245 million loss posted in last year’s Q1.
So it appears that the container lines are bulletproof and there is plenty of business to go around at the moment.
But this is traditionally the moment when caution gets folded up into a neat little aeroplane and then tossed into the wind. Container shipping executives need to fight their instinctive need to chase market share and keep their hands in their pockets. It might also be a good idea to get them to switch off their Blackberries so they aren’t tempted to call up a shipyard newbuilding manager and put in an order for 150 27,000 TEU ships.
The market has improved but there are still too many container lines in business, too much idle capacity and rates at too low levels to break out the bubbly.
We are still deep inside “anything can happen” territory.