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Shipping lines near end of decline in H1 2024

Shipping lines are getting closer to the end of their decline. What will the second half of the year bring?

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The largest shipping lines concluded another half-year with declines, but this could signal the end of the downward trend. Rising container rates have slowed the fall, and the second half of the year looks more promising.

The world’s second-largest shipping line, Danish company Maersk, reported first-half revenues of $25.12 billion, reflecting a decline of 7.6% year-on-year. However, it’s worth noting that in the second quarter, revenues were only slightly lower than the previous year—$12.77 billion compared to $12.98 billion.

EBITDA (earnings before interest, taxes, depreciation, and amortization) and net profit also saw significant drops. EBITDA fell by 45.7% year-on-year to $3.73 billion, while net profit was $1.041 billion, down by 72.7%.

These steep declines in profit were primarily driven by lower sea freight rates in the first half of this year compared to the same period in 2023. Additionally, ocean segment costs rose significantly. In Q2 2024, costs in the ocean segment increased by 7.8% year-on-year, including a 28% rise in fuel expenses and an 8% increase in container handling services.

Revenues in the ocean segment declined to $16.74 billion, while EBIT plummeted nearly tenfold to $309 million from $3.174 billion.

An optimistic sign was the growth in volumes—6.03 million FEU (40-foot containers) were handled in the first half of the year, compared to 5.63 million FEU in the first half of 2023.

In Maersk’s other two segments, the results were mixed for the January-June 2024 period. The logistics and services division saw revenues rise by 4.2% year-on-year to $7.14 billion. However, EBIT fell to $180 million from $250 million in the first half of 2023. On the other hand, volumes in air transport rose by 32% (to 169,000 tons), while supply chain management volumes increased by 16.4% (to 55.15 million m³).

In the terminal segment, the volume of goods handled grew by 7.8% to 6.33 million tons, significantly boosting financial performance. Revenues in this division rose by 14.3% to $2.1 billion, while EBIT increased by 37.2% to $653 million. Higher tariffs and cargo storage fees supported these results.

“Market demand has been strong, and as we all see, the situation in the Red Sea is already entrenched, putting ongoing pressure on supply chains. These conditions are expected to persist for the remainder of the year,” said Vincent Clerc, CEO of Maersk.

Upgraded forecast

Regarding the full-year outlook for 2024, Maersk has raised its forecast due to visible improvements in volumes. The Danish shipping line now expects the container market to grow by 4-6% this year. Previously, it had projected its own volume growth at 2.5-4.5%, but it now expects growth at market level.

Additionally, Maersk anticipates an EBIT result between $3 billion and $5 billion, and EBITDA in the range of $9 billion to $11 billion.

CMA CGM close to rebounding

French shipping line CMA CGM, the world’s third-largest, ended the first half of the year with revenues of $24.96 billion, just 0.4% below its result from the first half of 2023. EBITDA stood at $4.865 billion, clearly lower than the $6 billion recorded a year earlier. The shipping line’s net profit amounted to $1.45 billion, down 57% from the same period in 2023.

The primary drag on results came from the group’s core segment—ocean freight. Revenue in this segment reached $16.144 billion, a 6.3% decrease year-on-year. The EBITDA result of $3.93 billion was almost 25% lower than in the first half of 2023.

However, some stabilization is evident in this crucial segment for CMA CGM. Revenues in Q2 were only 0.8% lower than a year earlier, and EBITDA was down by just 9%. A significant rise in container rates in spring helped offset some of the costs related to longer voyages around Africa due to the Red Sea crisis.

Like most logistics operators, the logistics services segment remained profitable. Revenues reached $8.68 billion, up 13.5% year-on-year. The EBITDA result was also better than last year, rising 17.9% to $811 million.

CMA CGM noted that Q2 was clearly stronger than the same period last year in terms of demand, and also showed improvement compared to Q1 2024. This uptick in demand stems from increased household consumption in Europe and the United States, coupled with declining inflation.

This is reflected in the group’s volumes, with 11.6 million TEU transported in the first half of this year—up 9% from the January-June 2023 period.

Results declining despite volume growth

German shipping line Hapag-Lloyd, the world’s fifth-largest according to the latest Alphaliner data, recorded first-half revenues of $9.52 billion, representing a 12.2% decrease year-on-year.

Hapag-Lloyd’s EBITDA was $1.97 billion, down 9.1% compared to mid-2023, while net profit fell by 66% to $791 million.

“Even though we didn’t match last year’s exceptionally strong results, the first half of 2024 was solid due to strong demand and better spot rates,” said Rolf Habben Jansen, CEO of Hapag-Lloyd.

In the ocean freight segment, revenues dropped by 14% to $9.3 billion, mainly due to lower rates. While the average rate in the first half of this year was $1,391/TEU, it was $1,761 during the same period last year. The entire year of 2023 saw a decline in sea freight rates. Although rates have recently been rising, these increases have primarily occurred in the spot market since May of this year.

EBITDA in the segment fell to $1.9 billion from $3.75 billion a year earlier.

As mentioned by the company’s president, demand for transport increased in the first half of the year, which is reflected in higher volumes. Hapag-Lloyd ships transported 6.1 million TEU in the first six months of the year, a 5% year-on-year increase.

In the terminal and infrastructure segment, Hapag-Lloyd observed significant growth. Revenues surged to $217 million (almost a tenfold increase from $21 million), while EBITDA climbed to $71 million from $26 million. However, it’s important to note that this division was officially separated in the second half of 2023, so year-on-year comparisons for the first half of this year are not fully indicative.

Optimistic outlook

The rising demand and rates highlighted by Rolf Habben Jansen have prompted Hapag-Lloyd to raise its forecasts for 2024. The group’s EBITDA is now expected to range between $3.5 billion and $4.6 billion. However, the company emphasizes that in such a volatile and risky market, all forecasts carry a degree of uncertainty.

Hapag-Lloyd operates 287 container ships with a total capacity of approximately 2.17 million TEU, representing a 7.5% share of the global market. Additionally, the group holds stakes in 20 container terminals worldwide.


Photo by Nathan Cima on Unsplash

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