Shipowners’ revenues plummet: an overview of the sector
The logistics industry is still reeling from the effects of the pandemic. As the 2023 financial reports show, shipowners‘ revenues have fallen. And even the major carriers have suffered. Experts say the main reason for the decline is oversupply. The oversupply resulted from the pandemic, and now the shipping sector is under pressure.
Overviewing the major shipping lines
Germany’s Hapag Lloyd recorded a 46.6% drop in revenues in 2023. Profits totalled USD 19.4 billion, down from USD 36.4 billion in 2022. The operator attributed the decline to a fall in container shipping rates. This, in turn, was the result of the stabilisation of global supply chains. In 2022, the rate for transporting a TEU was USD 2863. In 2023, it fell to USD 1,500. At the same time, the economic downturn had little impact on Hapag Lloyd. Cargo volumes grew by 0.5% to around 12 million TEU.
The French shipping company CMA CGM also experienced a drop in profitability:
- revenue for the year was down nearly 37% to USD 47 billion;
- net income was flat at USD 3.6 billion and will be around USD 25 billion in 2022;
- marine sales were down nearly 47% to about USD 31 billion.
The shipowner’s cargo volume grew by 0.5% to almost 22 million TEUs. Moreover, the dynamics during the year were unstable. The company noted that the situation on the sea lanes deteriorated during the period under review. The release of new container vessels limited the rate of growth.
Maersk, the second-largest shipping company, also suffered. The Danish shipping company’s revenues in 2023 were around USD 51 billion. Compared to 2022, the decline was 37%. Maersk CEO Vincent Klerk said the previous period was transitional for the industry. After record growth, the market started to stabilise. In addition, the global situation has changed, leading to restructuring processes in the industry. The company is preparing for the challenges that will continue until 2024 but is ready for the realities.
Challenges for the shipping industry
According to shipping companies, the main obstacle to the sector is the oversupply of shipping capacity. According to The Loadstar, 41 new container ships were on the routes at the beginning of 2024. Of these, eight are large vessels. The total capacity was 300,000 TEU. By the end of the current period, the global maritime fleet will grow by 2.8 million TEUs. With such a supply volume, operators should not expect any rate increase. In the face of increased competition, they must focus on attracting more customers.
