The Top 20 container carriers have achieved an accumulated loss of USD 6.9 billion in the past four years, while at the same time they've increased their capacity much faster than their growth in freight volumes, according to a new mapping performed by analysts SeaIntel, Carrier Performance 2009-2012, based on the financial results of 20 of the 30 largest carriers that publish their financial results.
In this period, 2009 was the worst year ever for carriers and their liquidities, while most where able to recuperate their losses in 2010. The same, however, was not the case for 2011.
Only a few of the carriers were able to achieve an accumulated profit since 2009. Those few include Maersk Line, CMA CGM, Hapag-LLoyd, OOCL, Evergreen, Wan Hai, and SITC.
The big losers in the four-year period were Chilean CSAV, Cosco, APL, K Line, MOL, NYK, CSCL, and Zim. Together, these eight carriers have lost more than USD 9 billion.
The development is a testament to the carriers' resilience - and their ability to secure new financing. Not one of the Top 20 carriers has been forced to pull out of the market in this period. However, the less-than-steller results have not passed completely unnoticed, says the report.
"The question is now whether 2013 will be the year where the industry manages to regain those cumulative losses. Given the current developments in the market, such a development currently does not seem likely. Freightrates on the pivotal Asia-Europe trade are in freefall, and we are beginning to see the effects of cascading into emerging markets. A closer analysis of the Asia to East Coast South America trade reveals that the weekly capacity in the trade is poised to increase by 27% over the coming 6-8 weeks. This is driven by a combination of new services, service re-arrangements and the cascading of larger tonnage into the services," says SeaIntel.
The analysis points out that the carriers clearly have to make some difficult decisions concering the use of bigger ships. But this requires that the carriers can actually achieve a reasonable utilization of the large vessels, which has a negative pressure on the freight rates. This can be managed by removing capacity from the market - but carriers are not pulling capacity out of the market right now. Quite the opposite, as demonstrated by the developments on Asia-South America:
"Unless the global economy surprises positively - and we see a surge in demand - it would therefore seem that 2013 will be another year of losses in the industry unless the carriers stage a significant round of capacity reductions in the main trades," says SeaIntel.
As part of the evaluation is the fact that, for instance, French CMA CGM, the world's 3rd largest container carrier, included in its annual report for 2012 revenue stemming from the sale of terminals activities, just as Swiss MSC, the 2nd largest carrier in the world, and others, are not included in the mapping of the carriers' financial results. The analysis also takes into account the fact that several carriers are using different financial definitions.