The shipping companies’ third quarter financial results confirm that activity is clearly diminishing in the container line sector. The three leading European companies saw their turnover fall year on year during the quarter, while their EBITDAs were virtually reduced by half.
The trend is the same for the world number four, COSCO, which saw its third quarter revenues fall 23.5% on last year despite a 5% increase in cargo volumes. ONE and Yang Ming also reported a deterioration in their results. As usual, world number one MSC did not publish its results but it is clear that it has not been spared by the fall in rates.
In October, the shipping companies were still hoping to see a modest increase in freight rates during the final weeks of the year. To achieve this, all the alliances made priority use of the classical instrument of voyage cancellation. There was another factor, however, which was supposed to give their efforts an additional boost: China’s riposte to the United States’ ship taxation measures.
In the end, the trade and economic agreement concluded between President Trump and his Chinese counterpart Xi Jinping at their meeting on October 30 put an end to the escalation. Taxes on ships owned by China or Chinese interests calling in the United States, which came into force on 14 October, were suspended for a year on 10 November. Similar measures taken by China against American ships calling in its ports were also suspended.
On the one hand, this is a relief for shipping companies, which were bracing to pay a heavy price in the United States and China. But on the other hand, the one-year suspension of reciprocal ship taxes has abruptly eased tensions. Chinese exports quickly returned to their normal fluid rhythm, which reduced pressure on freight rates.
Added to this, the prospect of a gradual return of shipping between Asia and Europe to the Red Sea and the Suez Canal is becoming increasingly likely. Here again, it is double-edged news for carriers. Operational costs are certainly lower than via the Cape route, but there is also a real risk of a crash in freight rates (...)