Container lines profits and margins drop sharply in Q1

TORONTO : John McCown’s Blue Alpha Capital said that the container shipping industry reported a $9.9 billion net profit in the first quarter of 2025. This represents a 36.4% or $5.7 billion decrease over the preceding quarter with earnings standing at $15.6 billion in Q4 2024.

The results of 11 listed companies, comprising 64.5% of the total showed a net profit of $6.4 billion. Three of the companies are the container sector results of Mitsui OSK Lines, NYK, and K-Line, the three shareholders of Ocean Network Express (ONE).

It is the second straight quarter of decline in earnings for the container sector. The high for container shipping in terms of earnings in 2024 came in Q3 a net profit for the sector $26.8 billion as the market reacted to diversions via the Cape of Good Hope to avoid Houthi attacks in the Red Sea acting to soak up excess capacity from newbuildings entering the fleet.

In line with the drop in profitability analyst Alphaliner reported a drop in margins of the nine largest publicly traded container lines.“The average operating margin for the leading container carriers fell to its lowest level in four quarters, despite the front loading of cargo by American shippers looking to get ahead of Chinese tariffs,” it said in its weekly report.

It said the nine companies reported EBITs showed average margin of 18.1% in Q1 2025 compared to a 25.8% margin the previous quarter.

Looking ahead McCown expects earnings to decline further in Q2 2025 with a net income ranging from $5.0 to $6.6 billion, noting that this was well below the $10.2 billion in earnings for container lines in Q2 2024 when results were climbing due to Red Sea diversions.

“The balance of 2025 is certain to be among the most eventful periods ever for the container shipping industry. Buckle up as its likely to have lots of twists and turns,” McCown concluded.