Although container ship inventories have fallen by double digits since March, shipping companies still have record or near record results. Several Asian liner companies have released interim sales and revenues for the second quarter of 2022, as well as monthly operating data up to June.
Despite the bearish stock sentiment of , the numbers are still enormous. Costco China’s Cosco, the world’s fourth-largest liner group, said Wednesday that it expects net profit in the first half of 2022 to rise 74% year-on-year to 64.7 billion yuan ($ 9.7 billion). Second quarter profit totals 37.1 billion yuan, making it the most profitable quarter in the company’s history. Costco’s quarterly profit for the third quarter of 2021 was 30.5 billion yuan. The company made as many previous quarters as it did in the first half of last year.
OOCL, a subsidiary of Costco, announced its interim results on Wednesday. The OOCL disclosure provided further insights into how airline revenues continue to grow despite lower spot prices and lower volumes due to congestion and, more recently, weak import demand. Revenues have continued to increase over the past year as the average revenue per unit, equivalent to 20 feet, has increased, despite a decrease in the volume of TEU. Over the last few months, the increase in average earnings per TEU has been driven by rising contract rates, especially for US importers, which are more than offsetting the decline in spot rates.
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Hong Kong-headquartered OOCL reported total revenues of $5.3 billion for Q2 2022, up 52% y/y despite a 5.6% drop in throughput that OOCL attributed to “severe congestion.” The latest quarter’s revenues represent a new all-time high.
OOCL’s average worldwide revenue per TEU jumped 61.5% y/y to $2,874 in Q2 2022. The trans-Pacific market was by far the biggest driver. Revenue per TEU in the trans-Pacific spiked 97.6% y/y to $4,365. OOCL’s cargo in other trades (Asia-Europe, trans-Atlantic, intra-Asia) averaged only $2,355 in revenue per TEU, 46% below the trans-Pacific average.
Highlighting the diverging trends in trans-Pacific spot rates and contract rates, OOCL’s average revenue per TEU in the trans-Pacific (including both spot and contract business) increased 10% in the second quarter versus the first quarter of this year, despite indexes showing a clear decline in spot rates on this lane in April-June versus January-March.
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Higher revenues despite lower container shipping spot rates
This shows through in monthly operating data from Taiwan’s Evergreen and Yang Ming. Yang Ming, the world’s ninth-largest ocean carrier, has yet to post revenues for June, but its April-May numbers imply that Q2 2022 will boast the company’s second-highest quarterly total ever, if not a new record. Evergreen, the world’s sixth largest carrier, just posted its June operating revenues; Q2 2022 came in at a new all-time high of 175 billion New Taiwan dollars ($5.9 billion). The pace accelerated through the quarter. June boasted the highest monthly revenue in Evergreen’s history: $60.2 New Taiwan dollars ($2 billion).
European carriers will report Q2 2022 results in early August. Deutsche Bank analyst Andy Chu expects fresh records when Maersk (the world’s second-largest liner operator) and Hapag-Lloyd (No. 5) report.
The analyst forecasts that Maersk’s earnings before interest, taxes, depreciation and amortization will come in at $10.4 billion in Q2 2022, surpassing the previous record of $9.1 billion in the first quarter. Chu forecasts Hapag-Lloyd’s Q2 2022 EBITDA at $4.9 billion, just above first-quarter levels.
“We expect a strong Q2 reporting season. In most cases … we think FY 2022 will be a record year,” said Chu. The caveat for container-shipping stocks: “We think company outlooks for 2022 are largely irrelevant, as share prices are being driven by the macroeconomic outlook — interest rates and energy prices — and not the stock specifics.”
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