Ongoing volatility in container shipping rates triggered by the disruption to trade through the Red Sea has thrown the spotlight back on the Container Shipping Industry. The crisis is leading some to draw parallels with the pandemic-period, which generated extraordinary profits for container shipping companies, and at the beginning of the year the two container shipping giants, Maersk and Hapag-Lloyd, announced their new Gemini Alliance, a new operational agreement set to commence from February 2025.

It is against this backdrop of market disruption and change, that we complete our latest annual assessment of the finances of the major container shipping companies. While the recent surge in container shipping freight rates supports container shipping companies’ profitability in the near term, it does little to address looming oversupply concerns and in our view, focus will shift back to container shipping companies’ balance sheet strength, capital allocation and their acquisition strategies.

In this latest annual edition, our Drewry Maritime Financial Research team have extended the scope of their analysis to include both liquidity and leverage estimates for the next three years, based on a sample of carriers. 

Areas of analysis and key findings within this report:

• Despite the Red Sea crisis buoying up freight rates, we anticipate oversupply to pull freight rates below breakeven point.

   

• Throughout the year, the addition of new vessels to the global fleet will worsen the existing supply-demand imbalance, leading to a further slump in freight rates, thereby reducing revenues. Accordingly, we expect the industry to report an EBIT loss in 2024 compared to an EBIT profit in 2023. 

   

• Container shipping companies’ operating cash flow is expected to decline significantly in 2024 and 2025 amid weaker freight rates. However, companies still have substantial cash reserves from the windfall gains during the pandemic.  

   

• The vertical integration momentum of container shipping companies’ is slowing down as they focus on conserving cash for the anticipated downturn. Net capex for our portfolio of companies in 9M23 is down 7.6% YoY.