Revenues of the major shipping lines almost doubled between 2002 and 2006 and yet average operating margins rose by just 1.2 percentage points to 3.4 per cent. However this small increase masks a rollercoaster ride over the past five years when margins rose as high as 11.6 percent at their peak in 2004.
The findings, published in the latest Global Shipping Leaders report, produced by analysts, Transport Intelligence, indicates that the sharp fall in margins in 2006 was caused by the levels of new-build shipping capacity which the shipping lines had added to their fleets to exploit the high volume growth, mostly out of China. The softness in the rates which resulted, combined with significantly rising costs, hit the bottom line of every container shipping carrier. Profits have only stabilised due to consistently strong levels of demand and according to John Manners-Bell, Ti’s Chief Analyst, things could have been much worse.
‘Although margins shrank back to around 2002 levels, the industry was inadvertently helped due to the difficulty that shipbuilders had in responding to demand,’ he says. ‘Consequently the demand/supply ratios have remained stronger and relatively few shipping lines sank into the red. Early signs are that this year will see a rebound due to firmer rates and continued volume growth.’
Global Shipping Leaders 2007 details the shipping lines which have been most successful over the period. It examines the industry using a range of indicators such as slot capacity, revenue, profitability and margin growth. In addition it provides company profiles of the leading container shipping lines, including corporate overview; breakdown of financial data; operational analysis; examination of their strategic goals as well as key mergers and acquisitions.