Rising freight rates drive global container shipping profits soar

The global container shipping industry posted a sharp rise in profits in the second quarter, with revenues exceeding $10 billion, helped by record cargo volumes and rising freight rates. The growth came after disruptions to Red Sea shipping, a recent analysis showed.

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Net revenues at major container shipping companies, including Denmark’s AP Moller-Maersk A/S and China’s COSCO Shipping Holdings Co., nearly doubled compared with the first quarter of this year. These profits even exceeded the $8.88 billion in the same period of 2023, as highlighted in a report published on Saturday by industry expert John McCown.

McCown expects profits to continue to rise this quarter given the strong performance of international trade. The container shipping industry, which transports 80% of the world’s goods, experienced a boom during the pandemic due to strong consumer demand and supply chain disruptions. However, the industry posted a collective loss in the last quarter of 2023.

Now, the industry is once again benefiting from favorable supply and demand dynamics. Although profits are not at their highest levels during the pandemic, they are rebounding sharply. Capacity has been tightened, partly due to Houthi attacks in the Red Sea that have forced ships to detour south of Africa, leading to higher spot container freight rates and congestion at major ports.

Despite these challenges, global container throughput reached a record 46.4 million units (measured in 20-foot containers) last quarter. That beat the previous record of 46.2 million units set in the second quarter of 2021, according to McCown, citing data from Container Trade Statistics Ltd.

Demand was particularly strong in the United States, where retailers and importers were stockpiling inventory amid concerns about possible new U.S. tariffs on Chinese goods and strikes by dockworkers at ports along the East and Gulf Coasts.

“A strike on the U.S. coast, whether widespread or limited to key ports, would severely disrupt the container networks of major carriers and could quickly spread beyond specific U.S. routes,” McCown warned in the report.