MSK: 2024 will meet major challenges! HMM: The market is facing uncertainty

MSK: 2024 will meet major challenges! HMM: The market is facing uncertainty

Recently, shipping companies Maersk (MSK) and Hanshin Shipping (HMM) announced their fourth quarter and full year results for 2023, respectively.

In addition, the two shipping companies presented different views on the outlook for shipping in 2024.

In the fourth quarter of 2023, Maersk achieved operating income of $11.7 billion, down 34.1% year on year; Profit before tax (EBITDA) was $840 million, down 87.2 percent year over year. Earnings before interest and tax (EBIT) was a loss of $540 million versus $5.1 billion in the same period in 2022; Net income was a loss of $460 million for the same period in 2022 of $5 billion: EBIT margin of -4.6%.

In the whole year of 2023, Maersk achieved operating income of 51.1 billion US dollars, down 37.4% year on year; EBITDA was $9.59 billion, down 73.9% year-over-year; EBIT was $3.93 billion, down 87.3% year-over-year; EBIT margin was 7.7%

Although the recent crisis in the Red Sea has caused sea freight rates to rise, Maersk said the Red Sea problems only affected a third of the company's sea traffic.sea freight forwarder

The impact of the Red Sea crisis will be overwhelmed by the arrival of new shipping capacity ordered during the pandemic. According to Maersk estimates, even if the Red Sea problems continue for another year, with the delivery of record new ships, freight rates will return to the level before the Red Sea shipping disruption.

For the future, Maersk forecasts a profit drop of up to 90 percent in 2024, with EBITDA likely to be between $1 billion and $6 billion, well below last year's $9.8 billion, while its 2022 profit reached a staggering $36.8 billion.sea freight forwarder

Maersk expects container shipping to face "significant oversupply challenges" in 2024, with the impact likely to extend to 2026. Maersk forecasts that its global container trade will grow by 2.5 to 4.5 per cent this year, equivalent to 11 per cent of the capacity of its existing fleet coming to market.sea freight forwarder

South Korean liner company Hanshin Shipping (HMM) recently said it managed to remain profitable in the fourth quarter of 2023, in stark contrast to Maersk's performance.door to door service
In the fourth quarter of 2023, HMM's operating income fell 41 percent from the same period in 2022 to 2,063 billion won ($1.55 billion), EBIT was 43 billion won ($32 million), and net profit was 301 billion won ($230 million).door to door service

For the full year 2023, HMM achieved revenue of 8,401 billion won ($6.3 billion), operating profit of 585 billion won ($440 million) and net profit of 1,006 billion won ($750 million).door to door service

HMM does not disclose its volumes, so it is not possible to calculate its average freight rates per box, but it is clear that the South Korean liner achieved freight rates above break-even in the fourth quarter.

HMM said: "Overall, slowing demand and the influx of new container ships has led to a normalization of the container shipping market, putting downward pressure on freight rates for global trade in 2023."

In terms of the outlook, HMM said that "the crisis in the Red Sea continues, with severe drought in the Panama Canal limiting ship transit," and said this has led to "widespread uncertainty and market volatility."agent shipping china

For the prospects of the container market in 2024, some analysts believe that Maersk's forecast is too "too conservative", downplaying the impact of the Red Sea crisis on freight rates.agent shipping china

The analyst believes that the increase in freight rates caused by the Red Sea crisis should be enough to avoid a loss for the liner company in the 2024 fiscal year, even for Maersk.agent shipping china

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