Anticipated Rebound: Container Liner Profitability Set to Recover in 1Q

Container liner profitability expected to recover in 1Q

Only part of the price increases can be attributed to higher fuel and wage costs, which means container liners will benefit from the sudden mismatch and imbalances between demand and supply, as we have seen previously. Profits skyrocketed in 2021 and 2022. But container rates plummeted in 2022 and trended down over most of 2023, even dropping below pre-pandemic levels last autumn. With locked-in higher contract rates expiring, elevated profitability levels have been declining since the second half of 2022. This continued over 2023 with some liners approaching break-even in the third quarter and ZIM even encountering negative levels. With the current price hikes, profitability is likely to turn a corner, and we may see margin improvement either in the fourth quarter or by the first quarter of 2024.

 

Sinking margins of container liners will likely turn around in 1Q in wake of the Red Sea disruption

Operational profit (EBIT) per container liner, per quarter

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