The container shipping sector reported a $58.9 billion net income in Q3 2022, down 6.6% on Q2 in a sign that earnings have passed their peak.
John McCown’s Blue Alpha Capital estimated combined earnings of container lines, both those that publicly report results and privately held, at $58.9 billion for the third quarter of the year.
The Q3 2022 result was 22.4%, or $10.8 billion higher than the $48.1 billion profit the sector reported in the same quarter in 2021. It was, however, $4.4 billion or 6.6% lower than the profit container lines reported in Q2 this year.
“The small downturn follows seven straight quarters of record net income for the sector driven by significant pricing increases across all container lanes,” the report said.
“There will be further declines from Q3 in quarters to come. Aggregate overall pricing in the sector eased slightly in the latest sequential quarterly comparison, but not nearly at the same level as various spot rate indices.”
The report noted that overall average contract rates remained near peak levels in Q3 with average data for loads into the US at their highest ever in the quarter.
McCown said that taking into account all factors including spot rate trends through to November, the forecast for full year 2022 net income for container shipping was lowered $223.4 billion from $244.9 billion. He said that no earnings collapse was imminent.
The peak in financial results from container lines shows roughly nine months – one year lag to the peak in spot rate indices due to the nature of long-term contract negotiations on different trades.
The sharp falls in spot rates will put carriers under pressure at the next round of contract negotiations with the impact likely to be seen first on Asia–Europe with annual contracts up at year end and in May/June on the Transpacific trade.
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