International Ocean Freight Y2024 Review & Y2025 Prospect

Y2024 Review:

Carrier Margins Declined in Q4, but 2024 Remains Highly Profitable. The container shipping industry saw a decline in operating margins during Q4 2024, dropping to 25.4% from 38.4% in Q3. This decrease was driven by falling freight rates, surplus capacity, and political uncertainties. However, despite the Q4 downturn, 2024 closed as the third most profitable year in container shipping history, with total estimated profits reaching $32.6 billion. Given the historical average margin of 13.8% over the past decade, the industry remains in a strong position despite recent fluctuations.

Top Performers: 

HMM, Wan Hai, and ZIM Take the LeadAmong major carriers, HMM led the market with the highest Q4 margin, supported by a 65% surge in Transpacific rates, reaching $1,606 per TEU. Wan Hai Lines also performed exceptionally well, recording a 61% revenue increase and concluding 2024 with $2.6 billion in profits on $7 billion in revenue. ZIM rebounded from 2023 losses to achieve a 30.4% margin, benefiting from strong demand and the Red Sea crisis, which drove up freight rates. Evergreen Marine Corp (EMC), a consistent top performer, fell to fourth place due to its limited fleet expansion in 2024.

Y2025 Outlook: 

Earnings Expected to Decline SharplyLooking ahead, 2025 is expected to bring significant earnings declines for major carriers. Maersk projects EBIT between $0 and $3 billion, a drop of 54% to 100% from 2024 levels. ZIM anticipates a 63% to 86% reduction in profits, while Matson remains optimistic, predicting stable earnings if the Red Sea crisis continues to impact global trade. The timing of the Red Sea reopening and the delivery of new vessels will be critical factors in determining financial performance for the year.Despite the projected challenges, the container shipping industry remains resilient, with potential opportunities emerging from shifting market dynamics and geopolitical developments.