Shipping analysis: in 2020, container transportation may face a loss of more than 10 billion US doll

According to a senior analyst in New York, shipping companies usually survive the first three months of this year when supply is cut off, but the next quarter when demand is cut off could put the industry in a serious financial loss.
Blue alpha capital, a New York based consultancy, estimates that based on the financial results of 11 shipping companies in the first quarter, as well as the average level of shipping companies that did not report their financial data, the overall profit in the first quarter was $4 million, a modest loss, an improvement from $434 million in the same period last year.
However, John McCown, founder and analyst of blue alpha capital, said that the first quarter's results were "not very consistent among shipping companies". Six of the 11 shipping companies reported better results than the previous year, while five reported worse results.
He pointed out that K line and HMM were the worst performers in the quarter. K line lost $1.49 million on 30% of one, and HMM lost $55 million.
In contrast, Maersk's profit was $202 million (based on its estimated percentage of the group's profits in terms of its container business); CMA CGM's net profit was $48 million; COSCO's surplus was $41 million; and Hapag Lloyd's profit was $27 million.
McConnell warned that the & ldquo; container industry lost money in the first quarter, even before the full impact of the global demand shock, which will continue throughout the year's financial statements. ”
& ldquo; this negative catalyst is caused by China's tariffs, which are still 91% of the peak level. These tariffs are bound to reduce the trade volume from the Far East to North America by a double-digit percentage. &He said.
McConnell added that & ldquo; there is no doubt that global trade will see an unprecedented decline in container traffic in 2020. ”
In fact, shipping companies now seem to have embraced the situation: for example, in its first quarter results, Daffy said it expected a 15% drop in the second quarter after a 5% drop in freight volumes in the first quarter.
In addition, 2M and the alliance have announced the cancellation of about 75 voyages between Asia and Europe until October (traditionally the end of the peak season), indicating that there is no hope to recover V-type from the new crown.
Ocean carriers have successfully mitigated the impact of supply disruption in the second half of the first quarter through active & ldquo; blanking & rdquo; strategies, including withdrawing about 36% of Asia Europe flights in February, and 28% of trans Pacific flights.
However, McConnell does not believe that shipping companies can continue to maintain freight rates without the impact of a sharp decline in freight volume.
"Although the second quarter is likely to get worse, with some routes down as much as 30% year-on-year, the second half of 2020 will be very bad," he said. ”
& ldquo; my current median estimate of container industry profits in 2020 is a loss of $10.6 billion. The best is a loss of $5.4 billion, and the worst is a loss of $15.9 billion. &Said Mr. McConnell.
For liner companies, it is worrisome that he predicts that 2020 will be & ldquo; the worst financial performance ever in the industry & rdquo; and that the pressure on the carrier's balance sheet will & ldquo; lead to a major restructuring & rdquo;.