How much longer can the carriers bleed out?
In Asia this week, two more of the world’s top 10 container shipping lines revealed their financial results and they make for some very ugly reading.
The seventh largest container line by capacity plunged to a US$777 million loss in the first three quarters as year-on-year revenue slid almost 50 percent.
It is difficult to see a positive side to such poor results, but things are actually picking up for China Cosco. The first half of the year is where the damage was done as China’s exports slowed and left the carrier’s huge capacity sitting high and dry.
Its losses in the third quarter were a paltry US$101 million in the sense that the first quarter losses topped US$480 million. With just one quarter left, a spokesman for the line said a net profit is needed in the next three months, an outlandishly tall order as the container shipping business heads into its slack season.
However, in a statement to the Hong Kong Exchange, the listed company said it expected the full-year net profit would be negative because of the global economic crisis.
Across the Taiwan Strait, it was Evergreen’s fourth consecutive quarterly loss, which was far greater than expected. However, the carrier also lost less in the third quarter than it did in the first, pointing to improving business and a heavy focus on cost cutting.
The world’s box carriers now have two slow months to negotiate before they can expect to emerge into hopefully calmer financial waters. Trade is expected to pick up gradually, but it certainly won’t be fast enough to turn red ink into black.
An intriguing question is will the Top 10 list contain the same names at the end of 2010? It’s not an easy question to answer. Below are the carrier places as at August 2009, and with the possible exception of MSC, there is not one that has escaped severe financial turmoil.
1. AP Moller Maersk
2. Mediterranean Shipping Company
3. CMA CGM
4. Evergreen Marine
9. NYK Line