The world’s five largest publicly traded container shipping companies, including Denmark-based A.P. Moller-Maersk, France-headquartered CMA CGM, China’s COSCO SHIPPING Holdings, Japan’s NYK Line, and Germany’s Hapag-Lloyd, all experienced revenue declines during the fourth quarter of 2023.
This revenue slum trend coincides with the choppy water faced by the container shipping industry since 2020, continued weakness in global trade due to rising cost-of-living pressures,slower consumer demand, and increased retail stocks, according to S&P Global in December 2023.
Red Sea impact
With an exceptional event such as the Red Sea attacks that began in October 2023, the container shipping industry faces unprecedented challenges amid Red Sea attacks and regional unrest, according to George Khoury, global head of education and research at CFI.
“With a significant portion of global container trade passing through the Suez Canal, disruptions wreak havoc on supply chains. Forced rerouting around southern Africa elongates journeys, significantly increasing transport times, freight expenses, and insurance premiums,” Khoury told Forbes Middle East.
“The longer routes could also put pressure on available shipping capacity. This comes on top of the Panama Canal blockages, that are due to severe droughts, which exacerbate shipping woes,” he added.
Forbes Middle East surveyed the financial performance of 20 global container shipping companies, with quarterly combined revenues exceeding $53 billion. The collective revenues of the top five companies constituted 68.6% of the 20 companies’ returns in the three months ended in December 2023.
1 .A.P. Moller – Maersk
Headquarters: Denmark
Oct-Dec 2023’s revenues: $11.7 billion
YoY change: 34.1%↓
Despite the increase in shipment volume, A.P. Moller-Maersk reported a decline in its 2023’s fourth-quarter revenues to $11.7 billion, a decrease of $6.1 billion from the same quarter of 2022, due to price pressures. The squeeze in revenues comes with a decline in revenues generated from the oceans sector, which contributed 61.2% of total quarterly revenues, in addition to a decrease in logistics services revenues with the stability of revenues generated from the ports sector.
This resulted in the company incurring a net quarterly loss of $456 million, compared to a net profit of $5 billion in the same period in 2022. Annually, total revenues fell from $81.5 billion in 2022 to $51.1 billion last year, while annual net profit decreased significantly to $3.9 billion in 2023, compared to $29.3 billion in 2022. Moreover, the company’s fleet reached 672 vessels: 310 owned and 362 chartered.
The company announced on January 5, 2024, the temporary rerouting of all its vessels around the Cape of Good Hope due to security concerns in the Red Sea and Gulf of Aden.
2. CMA CGM Group
Headquarters: France
Oct-Dec 2023’s revenues: $10.6 billion
YoY change: 37.4% ↓
The revenues of the French CMA CGM Group fell from $16.7 billion in Q4 2022 to $10.6 billion in Q4 2023, while revenues for the entire year of 2023 amounted to $47 billion, a decrease of 36.9% on an annual basis due to the deteriorating conditions in the maritime shipping markets.
CMA CGM Group, which operates in 160 countries and has 155,000 employees, has launched several ambitious partnerships to promote the energy transition in the shipping and logistics industry. At the COP28 conference, the company’s CEO and Chairman, the French billionaire of Lebanese origins, Rodolphe Saadé, announced collaborating with the CEOs of the world’s top shipping companies, proposing a common vision and measures targeting the decarbonization of the industry. Saadé’s wealth amounts to $8.9 billion as of April 18, 2024, per Forbes estimates.
In December 2023, the company announced rerouting some of its vessels far from the Red Sea based on an in-depth evaluation of the security landscape.
3. COSCO SHIPPING Holdings
Headquarters: China
Oct-Dec 2023’s revenues: $5.8 billion
YoY change: 45.1% ↓
The revenues of the Chinese company COSCO Shipping Holdings in the fourth quarter of 2023 fell by 45.1% to reach $5.8 billion. At the end of December 2023, the group’s fleet recorded 502 ships with a capacity of more than 3 million twenty-foot equivalent units (TEU) of cargo, a unit of measurement for container shipping capacity, up 5.2% compared to the beginning of the year.
Formerly known as China COSCO, COSCO Shipping Corporation Limited was established on March 3, 2005. It was listed on the Hong Kong Stock Exchange on June 30, 2005, and on the Shanghai Stock Exchange on June 26, 2007.
4. NYK Line
Headquarters: Japan
Oct-Dec 2023’s revenues: $4.4 billion
YoY change: 9% ↓
NYK Line’s revenue for the third quarter of their fiscal year ended December 2023 declined by 9%, reaching $4.4 billion. Highlighting the reasons behind the revenue decline, the company said that a combination of factors, including rising inflation and interest rates, especially in the US and Europe, dampened cargo demand. This, coupled with the influx of newly built ships, pushed freight rates down compared to the same period a year earlier.
In January 2024, NYK Line, among the world’s largest ship operators, halted the passage of all of its operated ships through the Red Sea.
NYK Line’s establishment dates back to 1885. Its main activities profile includes the liner and logistics business, bulk shipping business, and other businesses such as real estate.
5. Hapag-Lloyd
Headquarters: Germany
Oct-Dec 2023’s revenues: $4.1 billion
YoY change: 48.8% ↓
Coinciding with a shrinking freight rate, German Hapag-Lloyd’s revenues declined by 48.8% to $4.1 billion in the fourth quarter of 2023, causing the company to incur net losses of $234 million compared to profits of $3.3 billion a year earlier.
In February 2024, Hapag-Lloyd said that all schedules for voyages starting in February had been updated to show the Cape of Good Hope route due to security concerns. The company’s fleet increased by 6% to reach 266 vessels at the end of December 2023, compared to 251 vessels a year ago. The total capacity hit 2 million TEU by the end of Q4 2023 compared to 1.8 million TEU at the end of 2022.
The company has approximately 13,500 employees and 403 offices in 140 countries.
Source: forbesmiddleeast