After two years of unprecedented profits driven by global supply chain disruptions, the container shipping industry experienced a dramatic downturn in 2023. Key players like Maersk, CMA CGM, and COSCO faced significant declines in earnings as freight rates plummeted and demand softened. These declines were further exacerbated by the influx of new vessels, which led to an oversupply of shipping capacity. Adding to the industry’s challenges were labor disputes, including the recent East Coast longshoreman strike in the U.S., which further complicated an already fragile market.
Maersk and CMA CGM’s Profit Decline
Maersk, one of the largest container shipping companies globally, saw a substantial 37% drop in revenue, bringing in $51.1 billion in 2023 compared to $81.5 billion the previous year. Its EBITDA fell sharply from $36.8 billion in 2022 to just $9.6 billion. This sharp decline was attributed to falling freight rates and lower shipping volumes as global trade volumes normalized after the pandemic boom .
CMA CGM suffered similar losses, with revenues dropping by 36.9% to $47 billion and EBITDA plunging by 73% to $9 billion. The French shipping giant’s net profits shrank from $24.9 billion in 2022 to just $3.64 billion in 2023. The company cited deteriorating market conditions and an oversupply of vessels, which drove freight rates lower, as major contributors to this decline .
COSCO Faces Pressure
COSCO Shipping also felt the impact of the industry downturn, posting $3.2 billion in net profit for the first three quarters of 2023. However, this figure represented a notable reduction from previous years, as the company faced similar challenges, including weaker demand and the increased availability of container ships, which pushed rates down .
Impact of the East Coast Longshoreman Strike
Adding to the industry’s woes is the longshoreman strike on the U.S. East Coast. This strike, which affects major ports like New York and New Jersey, creates additional supply chain disruptions, delaying shipments and further straining the already volatile market. Labor strikes such as this one cause temporary capacity bottlenecks, pushing rates up in the short term. However, the oversupply of shipping vessels globally means that the strike’s longer-term impact on freight rates remains limited .
The labor action highlights the fragile balance between shipping capacity and demand. Although the strike caused congestion and delays, it also emphasized the challenges the industry faces with labor relations and how such disruptions can ripple through the global supply chain, affecting shipping schedules and operational costs.
Resilience in Logistics Sectors
Despite the challenges in ocean freight, companies like Maersk and CMA CGM found some relief in their logistics and services divisions, which showed more resilience. Maersk’s logistics revenues saw a modest decrease, from $14.4 billion in 2022 to $13.9 billion in 2023, while CMA CGM’s logistics segment reported $15.2 billion in revenues, down just 5.5% from the previous year . This diversification helped cushion the blow from the declining profits in the shipping segment, particularly as logistics proved more stable in a volatile market.
Remaining Outlook for 2024
As the container shipping industry nears the end of 2024, many companies expect continued challenges. Oversupply in shipping capacity and sluggish global economic growth are likely to persist, putting further pressure on freight rates. The longshoreman strike and other potential labor actions in key global ports could create temporary disruptions but are unlikely to reverse the overall trend of declining profitability.
The container shipping industry’s record-breaking profitability during the pandemic is now a distant memory, as Maersk, CMA CGM, and COSCO face lower freight rates, oversupply, and ongoing labor disruptions. The future will likely see more emphasis on resilience in logistics and supply chain management as the industry adapts to these new market realities.
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