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BIG
is beautiful in the container shipping sector.
At least that's what many industry insiders
today are saying.
Regardless
of where one stands on the issue of whether
size matters in the shipping industry or
not, the results are hard to ignore. If
we look at operating profits alone, it would
appear that bigger is better...
Maersk
Line, the world's largest shipping line,
and CMA CGM, the world's third largest,
topped all carriers in their financial performance
for the first quarter of the year....
 click image
to enlarge
MSC,
which is currently ranked number two in
terms of fleet size, is privately owned
and has released no details of its financial
performance to date.
Marseilles-based
CMA CGM posted a first quarter operating
profit of US$196 million, according to Alphaliner,
which was good enough to give it an operating
margin of 5.1 per cent, which is impressive
for a shipping line.
Maersk
came in at a close second with a profit
of $189 million and a margin of three per
cent.
Drewry
Maritime Research, in its Container Insight
publication, said that the "big three"ˇXMaersk,
MSC and CMA CGMˇXall boast strong economies
of scale, which on the transpacific trade
currently translates into deploying ships
that are 32 per cent larger than the average
vessels sailed by other carriers on the
route.
The
average active vessel size of the top three
liners reaches 8,550 TEU, while the overall
average ship size in the industry is only
6,490 TEU, according to Drewry's figures.
Drewry
believes this explains why CMA CGM and Maersk
were able to earn more than other major
carriers at EBIT (earnings before interest
and tax) level in 2012, and continued to
surpass other smaller rivals in terms of
profitability in the first quarter of this
year.
"It
also explains why carriers, such as APL
and Hanjin, whose transpacific cargo accounts
for a large proportion of their total liftings
(29 per cent and 41 per cent respectively
in the first quarter of 2013), yet operate
vessels well below the average size, were
amongst the poorest," said the Drewry's
report.
Alphaliner's
figures show that Singapore's APL was the
worst performer among the 18 carriers. It
suffered an operating loss of $101 million
and had a negative margin of -5.1 per cent
in the first quarter.
Korea's
Hanjin also lost $65 million in the first
three months of the year with a negative
margin of -3.4 per cent.
Alphaliner
said that among the 18 carriers that posted
their first quarter results, only four ˇV
CMA CGM, Maersk, "K" Line and
CCNI ˇV were able to operate in the black.
The
operating losses for the rest of the 14
carriers totaled $762 million. The aggregate
losses, while large, did show a significant
improvement as the same 18 carriers surveyed
had totally lost $1.89 million in the first
quarter of 2012.
Another
upside is that there is little risk of any
carrier being forced out of the market in
the near terms as all have reportedly been
able to secure financial backing during
this difficult operating period.
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