SeaIntel: Carriers Deliver Marginal Financial Recovery in Q3

Although the third quarter of 2017 financially saw a significant improvement over the same quarter of 2016, the financial recovery is just marginal, according to SeaIntel Maritime Analysis.

During the quarter, ten of the eleven carriers that have published their results recorded a positive EBIT/operating profit, with only Hyundai Merchant Marine (HMM) ending the quarter in the red.

“While 2017-Q3 freight rates certainly were an improvement over the horrendous 2016-Q3 peak season, the improvement is just marginal, and we are still significantly below the 2011-2014 period, and just barely at the level seen in 2015,” Alan Murphy, SeaIntel CEO, said.

In the third quarter of 2016 only Hapag Lloyd and Wan Hai reported positive figures of USD 72 million and USD 10 million, respectively. In the three-month period of 2017 however, all the carriers except for HMM have posted positive quarterly operating results.

Maersk Line, which reported the biggest Y/Y EBIT loss of USD 456 million in third quarter of 2016, has made the biggest recovery with a positive EBIT of USD 263 million in the third quarter of 2017, which is also the largest Y/Y change of USD 416 million in the three-month period. COSCO also made a strong recovery, turning an operating loss of USD 244 million in the three months ended September 30, 2016 into an operating profit of USD 15 million in seen in the latest quarter.

HMM, which is the only carrier to record an operating loss, of USD 26 million, has now recorded operating losses in each of the last four third quarters. However, HMM have reduced their losses by almost USD 170 million Y/Y in the latest quarter, from an operating loss of USD 195 million seen in the same period a year earlier.

Hapag Lloyd is the only carrier presenting positive operating results in third quarters of all 8 years from 2010 to 2017. MOL, which posted an operating loss in every third quarter since 2011, recorded an operating profit in the third quarter of 2017, of USD 19 million, for a Y/Y change of USD 112 million.

“As we have detailed in our analysis in recent weeks, the soft freight rates have been driven by low peak season utilisation levels, as carriers have almost completely avoided blanking sailings in 2017. This is essence explains why 2017-Q3 operational returns severely underperformed carrier expectations, despite the healthy 2017-Q3 demand growth,” Murphy added.

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