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Container shipping profits will drop by 80% in 2023/24: HSBC report

A downcycle is unavoidable for container shipping in 2023-24 and profits will fall by 80%, a report by HSBC Global Research forecasts.

Marcus Hand, Editor

September 1, 2022

2 Min Read
A container being loaded onto a Maersk vessel
A container being loaded onto a Maersk vesselPhoto: AP Moller - Maersk

After two years of unprecedented rises container freight rates were seen as having peaked with a downcycle in 2023 -  2024 driven by overcapacity. However, Parash Jain, Head of Shipping & Ports & Asia Transport Research for HSBC does not believe the sector will return to losses, which have so often characterised it over the last two decades pre-pandemic.

“There are signs that spot rates could fall to pre-pandemic levels swiftly on the widening demand-supply gap (as seen in the BDI), but we maintain that contract rates should settle above their pre-pandemic levels and that capacity discipline will keep spot rates from lingering at trough levels,” Jain said.

He said profits are set to fall from their peak estimated for 2022, but would still be better in the past. The largest public-listed container line AP Moller – Maersk has forecast EBITDA of $37bn for 2022.

The deep slide in rates from current levels will be driven by a mismatch between container growth and the supply of new vessels. HSBC projects global container trade will decline 2% in 2022 and 3% in 2023 before recovering by 2.5% in 2024. By contrast vessel capacity will increase by 6.2% in 2022, and 6.5% and 8% in 2023 and 2024, respectively.

HSBC said it expected the sector to bottom out in 2024, noting its forecasts were well below consensus for 2023 – 24.

Related:A look behind the eye-watering Maersk results

Despite the lower profit forecasts HSBC maintaining a buy on two container shipping stocks – Maersk and SITC.

“Come 2024 (trough year in this down-cycle), we believe Maersk will have returned just over 50% of its market cap to shareholders and will be valued as a less cyclical business, with non-ocean contributing 44% of its operating profit,” the report said.

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About the Author

Marcus Hand

Editor

Marcus Hand is the editor of Seatrade Maritime News and a dedicated maritime journalist with over two decades of experience covering the shipping industry in Asia.

Marcus is also an experienced industry commentator and has chaired many conferences and round tables. Before joining Seatrade at the beginning of 2010, Marcus worked for the shipping industry journal Lloyd's List for a decade and before that the Singapore Business Times covering shipping and aviation.

In November 2022, Marcus was announced as a member of the Board of Advisors to the Singapore Journal of Maritime Talent and Technology (SJMTT) to help bring together thought leadership around the key areas of talent and technology.

Marcus is the founder of the Seatrade Maritime Podcast that delivers commentary, opinions and conversations on shipping's most important topics.

Conferences & Webinars

Marcus Hand regularly moderates at international maritime events. Below you’ll find a list of selected past conferences and webinars.

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