In 2023, the German shipowner Hapag Lloyd faced a significant downturn, with revenues plunging by a staggering 46.7% to USD 19.4 billion, compared to USD 36.4 billion in 2022.
EBITDA, standing at USD 4.8 billion, marked a notable decrease of 76.5% from the previous year’s USD 20.5 billion. Similarly, the EBIT result amounted to USD 2.7 billion, reflecting a stark 84.8% decline year-on-year.
Hapag Lloyd attributes these declines largely to reduced container rates stemming from the normalisation of global supply chain conditions in 2022. The average rate for a TEU (20-foot container) plummeted from $2,863 in 2022 to $1,500 in 2023.
Despite the broader economic slowdown, the German shipping giant managed to maintain its cargo volumes. In fact, 11.9 million TEUs were transported on its vessels last year, representing a marginal increase of 0.5% compared to the previous year.
France’s CMA CGM also down
The French shipping giant, CMA CGM, faced a significant downturn in its results last year. Its revenues dipped to $47 billion in 2023, marking a substantial 36.9% decrease from the previous year. The EBITDA result saw an even sharper decline, plummeting by almost 73% compared to 2022, totaling USD 9 billion. Net profit suffered a severe blow as well, with the company generating a mere USD 3.64 billion in 2023, a stark contrast to the previous year’s robust net profit of USD 24.9 billion.
Attributing this decline to “the deterioration of business conditions in maritime transport during 2023,” the company saw a staggering 46.7% decrease in revenues in the maritime segment, from USD 58.95 billion to USD 31.4 billion year over year. Similarly, EBITDA experienced a significant drop, down by 76.6% year-on-year, totaling USD 7.4 billion.
Despite a slight increase in the volume transported by the CMA CGM fleet in 2023 compared to the previous year, by 0.5% to 21.8 million TEU, the year was marked by disparate halves. While the first half saw a 2.7% decrease in volume compared to the same period the year prior, a rebound was evident in the market during the second half, with a 3.8% increase compared to 2022.
However, this increase in cargo volume did not translate into higher rates, as rates remained low due to the influx of new container ships flooding the market.
On a slightly brighter note, the logistics segment showed more resilience. Though revenues were lower than the previous year at $15.2 billion, the decline was relatively small at 5.5%. Moreover, EBITDA profit was 12.5% higher than in 2022, reaching USD 1.37 billion.
“Shipping market conditions deteriorated progressively during the year. Our results are down as we expected. Logistics, on the other hand, is proving more resilient, and accounts for a significant part of our business,” remarked Rodolphe Saade, CEO of the CMA CGM group.
However, in other sectors of the group’s business, including port terminals, the aviation division, and investments, revenues increased by 10.8% to USD 2 billion, while the EBITDA result witnessed a 47% decrease from the previous year, amounting to USD 236 million.
Despite the challenges, 2023 was marked by significant acquisitions for CMA CGM, strengthening its position in the logistics and port infrastructure market. Notably, the group acquired two large ports in the United States (in Bayonne and New Jersey) and signed an agreement to take over the logistics operator Bollore Logistics, aligning with Saade’s optimistic outlook on the logistics business.
Looking ahead to 2024, the French shipowner anticipates sluggish economic growth, although international trade is expected to rebound from the lows of the previous year. Unfortunately, the oversupply of transport means due to the continuous launch of vessels poses challenges for shipowners.
Maersk not immune from the downturn either
The second-largest player in the shipping market, Danish shipowner Maersk, also experienced significant declines. Revenues plummeted to USD 51.1 billion in 2023, marking a staggering 37% decrease from the previous year’s USD 81.5 billion.
The company’s EBITDA for the entire year amounted to USD 9.6 billion, nearly a quarter of its 2022 figure of USD 36.8 billion.
Maersk’s EBIT stood at USD 3.9 billion by the end of 2023, down from almost USD 31 billion the year before.
“2023 was a transitional year following the extraordinary market boom caused by the pandemic. We secured solid financial results despite significantly changed circumstances, and we are well positioned to manage the expected headwinds in 2024,” said Vincent Clerc, CEO of Maersk.
Like many global logistics operators, the maritime transport segment bore the brunt of the impact in 2023, while divisions focused on logistics services showed more resilience.
In the Ocean segment, revenues plummeted from $64.3 billion in 2022 to $33.6 billion the following year. A similarly sharp downturn was observed in EBITDA, plunging from USD 33.8 billion to USD 6.9 billion.
Conversely, the Logistics and Services sector experienced more modest declines. Revenues dipped from USD 14.4 billion to USD 13.9 billion, with EBITDA decreasing from USD 1.37 billion to USD 1.25 billion. Terminal operations also saw a decrease in revenues, from USD 4.4 billion to USD 3.8 billion, and in EBITDA, from USD 1.5 billion to USD 1.3 billion.
Looking ahead, Maersk anticipates its 2024 EBITDA to range between 1 to 6 billion dollars, a significant decrease compared to the previous year’s result of $9.6 billion.
The Danish shipping giant projects a 2.5-4.5% increase in global container volume for 2024, with expectations that its own volumes will mirror this growth trajectory.
Overcapacity remains a problem
Vincent Clerc believes that this year shipowners will be strongly affected by the problem of oversupply in ocean transport.
“The current market remains one of robust volumes, but while the Red Sea crisis has caused immediate capacity constraints and a temporary increase in rates, eventually the oversupply in shipping capacity will lead to price pressure and impact our results,” said Maersk’s CEO.
And there is something to be afraid of. According to The Loadstar, in January of this year, the oceans welcomed 41 new container ships, boasting a collective capacity of 300,000 TEU (twenty-foot equivalent units). Notably, eight of these vessels surpassed the 15,000-ton mark, earning classification as large container ships.
Yet, this serves merely as a prelude to what lies ahead in 2024. Projections suggest that this year, the global fleet of container ships will augment its transport capacity by a staggering 2.8 million TEU. This figure, though slightly shy of the capacity boasted by the world’s fourth-largest Chinese shipowner, COSCO, with its 3.1 million TEU fleet, is nonetheless significant.
To contextualize further, let’s consider Alphaliner’s statistics: MSC leads the pack with a fleet capacity of 5.7 million TEU (as of February 26), followed by Maersk with 4.2 million TEU, and CMA CGM with 3.6 million TEU. German carrier Hapag Lloyd, mentioned earlier, secures the fifth position globally with 2 million TEU.
As per Loadstar reports, MSC has orders for this year totaling 1.4 million TEU, CMA CGM follows closely with 1.1 million, and COSCO anticipates an addition of about 790,000 TEU to its fleet.
Consequences of the pandemic
Alphaliner observes that the bulk of sea transport capacity is currently absorbed, largely due to the crisis in the Red Sea. The introduction of new container ships is alleviating the backlog of longer routes caused by vessel wait times. However, the critical question remains: how will shipowners manage their expanded resources once the crisis at the Suez Canal subsides?
The anticipated surge of new container ships is a direct consequence of the booming maritime transport market during the pandemic. Capitalizing on the extraordinary economic conditions, shipowners witnessed a sharp increase in container rates due to inadequate transport capacity.
Consequently, many industry players commenced ordering new vessels, slated to set sail between 2023 and 2024. Even then, there were warnings about the potential repercussions of this wave of orders if the economic landscape were to deteriorate by the time these vessels were completed. Unfortunately, this scenario has materialised.
Featured image photo by Matthis Volquardsen via Pexels
