Liner Trade Profit-taking Set To Shrink

Profits for the global liner trade are anticipated to decrease significantly in 2025, albeit off a very high base of profit-taking.

Analysts at ocean trade consultancy firm Sea-Intelligence have calculated that the container shipping industry achieved combined earnings before interest and taxes ebit of 60 billion last year, the third-highest figure in the industry's history.

Its also the highest outside of the Covid era.

This significant profit is attributed to various factors, including disruptions on major shipping routes.

John McCown, a prominent container markets analyst and head of New York-based Blue Alpha Capital, expects the liner sector to remain profitable in 2025, although profits are likely to decrease below 10bn.

He notes that the downward trend in pricing will continue into the first quarter of 2025, resulting in lower earnings compared to the fourth quarter of 2024.

Additionally, McCown highlights that the tariff situation introduced by the new US administration has increased uncertainty, which is affecting market stability.

The Bank of International Settlements has warned that policy uncertainty, particularly regarding tariffs and fiscal policies, can negatively affect economic demand and investment. If tariffs are implemented, this uncertainty may lead to inflationary pressures.

Container spot rates have been declining steadily this year, with the Shanghai Containerized Freight Index dropping by 47 since the start of the year.

According to maritime trade advisory Drewry, prices on key routes, such as Asia to North Europe, Asia to the Mediterranean, and transpacific routes to the US are now lower than at any point in 2024.

However, compared to pre-Red Sea crisis levels in December 2023, these routes still show significant increases.

The softening of spot rates is attributed to weaker volumes following the Chinese Lunar New Year, increased competition among liner companies due to alliance restructuring, and ongoing tariff announcements from the US and its trading partners.

Maersk, in its annual report, highlighted that liner profits in 2025 were precarious and largely dependent on external factors, particularly developments in the Middle East.

The Danish line reported its third-best financial year ever in 2024 with an ebit of 6.5bn, and forecasts a global container volume growth of around 4 for 2025.

However, the company's ebit forecast for 2025 ranges from zero to 3bn, contingent on whether the Red Sea shipping route reopens mid-year or later.