May 29, 2015 | Industry Insights
Profits Skyrocket in Q1 for Some Shipping Lines
Profits in a number of big shipping lines rose dramatically in the first quarter of 2015. A drop in the price of oil and the rising value of the U.S. dollar helped bolster profits, even though unit costs increased for some shipping lines. The influence of market forces outside shippers’ control suggests that high profits could be short-lived should economic conditions change.
Two large lines reported massive swings in profits, and several countries said they saw increases in traffic.
Maersk Line reported a record $714 million profit for first quarter 2015, an increase of nearly 60% from first quarter 2014, though its revenue fell 3.2% from the same period a year prior. Volumes fell 1.6%, while unit costs rose 2.1%. Rates decreased by 5.1% year over year in the first quarter partly due to lower fuel costs, but global supply in terms of nominal capacity rose 7.2%, while demand rose just 1.6%, according to numbers reported by Lloyd’s Loading List.
CMA CGM reported a 400% increase in net profits for the first quarter, due largely to a 36.5% decline in bunker prices per TEU year on year. Its volumes rose 10.5%, mainly from its East-West lines, especially to and from the U.S. Its consolidated revenue was up 1.8%.
Some regions reported an increase in cargo traffic, with several in Europe indicating a 6% rise in traffic and several in Asia reporting growth in the 5% to 10% range. Gulftainer, a privately owned, independent terminal operating and logistics company in Brazil, logged a 97% growth in cargo throughput over first-quarter 2014 numbers. On the other hand, demand in Asia-to-Northern Europe trade declined by about 1% in the first quarter, though nominal capacity rose 15%, according to BlueWater data.
With all the volatility, it’s hard to insure accurately. That’s why regular reviews of your insurance coverage are necessary. As demand declines, will you be taking ships off line or shifting them to other regions of the world? Those actions can seriously affect your commercial shipping coverage and need to be brought to the attention of your insurance broker. Expanding your fleet, adding warehousing or other logistics businesses to your portfolio or decommissioning ships are all common activities that should be discussed with your insurance broker before action is taken to ensure coverage isn’t disrupted and gaps in your protection aren’t created.
We invite you to learn more about us, our experienced talent in this highly specialized area, our creative solutions, and the value we will bring to you and your clients. Please contact us at 1-800-ROANOKE (800-762-6653).