Is profit solely dependent on the Red Sea crisis? Consolidation giants’ performance rises together

According to the Shipping Industry Network, Evergreen Shipping, Hapag Lloyd, and Hanxin Shipping (HMM) announced their Q2 2024 performance. Under the Red Sea crisis, Evergreen Shipping achieved a performance surpassing its peers (the shipping company that has reported its first half performance so far) with its global ranking of 7th. In the first half of 2024, its net profit reached NT $48.78 billion (approximately USD 1.5 billion), and its gross profit margin reached 28.1%, both of which are ahead of its peers.
In short, under the Red Sea crisis, spot freight rates rose significantly in the first half of the year, and Asian shipping companies represented by Evergreen Shipping had a relatively small proportion of annual contracts. In other words, their spot exposure on trans Pacific routes and Asia to Europe routes was relatively larger, resulting in a significant increase in general operating income and net profit.
Changrong Shipping’s net profit for the first half of 2024 is $1.5 billion
In the second quarter of 2024, Evergreen Marine achieved a cumulative operating revenue of NT $106.33 billion (approximately USD 3.28 billion), a year-on-year increase of 57.8%; The gross profit was NT $35.89 billion, a year-on-year increase of 160.1%; The operating profit was NT $32.68 billion, a year-on-year increase of 222.5%; The net profit was NT $30.57 billion (approximately US $940 million), with a profit of NT $13.70 per basic share. The gross profit margin reached 33.7%.
In the first half of 2024, Evergreen Marine achieved a cumulative operating revenue of NT $194.97 billion (approximately USD 6 billion), a year-on-year increase of 45.2%; The gross profit was NT $54.84 billion, a year-on-year increase of 91.8%; The operating profit was NT $48.33 billion, a year-on-year increase of 127.2%; The net profit was NT $48.78 billion (approximately US $1.5 billion), with a profit of NT $21.86 per basic share. The gross profit margin reached 28.1%.
On August 13th, Evergreen Shipping announced that due to a shortage of containers in the market, the company plans to purchase 100000 TEU containers.
According to the latest data from Alphaliner, among the top 100 global shipping companies in terms of capacity, Evergreen Shipping ranks 7th globally with 220 operating vessels, including 137 self owned vessels and 83 leased vessels, with a total capacity of 1.695 million TEUs. In addition, Evergreen Marine holds 61 new shipbuilding orders totaling 690000 TEUs.
HMM’s Q2 net profit increased by 111% year-on-year
According to the Shipping Industry Network, under the Red Sea crisis, the second quarter profit of South Korean flagship shipping company HMM increased by 111% year-on-year compared to the same period last year.
In the second quarter of 2024, HMM achieved a revenue of KRW 2.6 trillion (USD 1.91 billion), a year-on-year increase of 25%; Net profit increased to KRW 661 billion (USD 480 million), a year-on-year growth of 111%.
HMM stated that higher freight rates and profit oriented strategies have led to revenue and profit growth.
However, HMM added that there is still considerable uncertainty due to geopolitical risks and global trade tensions, which could lead to a sudden shift in the global shipping market.
HMM plans to improve its service network by building new and second-hand ships, opening up new routes including Mexico, and achieving corporate diversification.
HMM will prepare for the rapidly changing market situation by introducing ultra large vessels, enhancing environmental competitiveness and digitization, reducing costs, and pursuing profit oriented operations
In the first half of 2024, HMM achieved a revenue of 4.9 trillion Korean won (3.6 billion US dollars), a year-on-year increase of 18.6%; Operating profit increased by 125%, reaching KRW 1 trillion (USD 730 million); Net profit increased to KRW 1.1 trillion (USD 840 million), a year-on-year growth of 88%.
HMM is advancing its ambitious expansion plan
HMM is advancing its ambitious fleet expansion plan and has made seven purchases of bulk carriers worth over $240 million in the second-hand ship market in the past two months.
HMM announced an ambitious plan after the failed privatization this year to expand its non container fleet from 36 to 110 ships by 2030.
In December 2023, the Harim JKL consortium, consisting of South Korean Harim Group and private equity firm JKL Partners, was selected as the preferred buyer for the 57.9% stake in HMM held by major shareholders KDB and KOBC.
In February 2024, due to the Harim JKL consortium’s failure to resolve its dispute with HMM’s major shareholder, resulting in a failed sale, the South Korean government announced that HMM would temporarily remain in the hands of the state and focus on ensuring the “stable operation” of the shipping company.
In April 2024, HMM announced a significant expansion of its container and non container fleets to enhance its global competitiveness. By 2030, HMM container ship capacity will increase from 84 vessels with 920000 TEUs to 130 vessels with 1.5 million TEUs.
According to the latest data from Alphaliner, HMM ranks 8th among the top 100 global shipping companies in terms of capacity, with 78 operating vessels, including 51 self owned vessels and 27 leased vessels, with a total capacity of 857000 TEUs. In addition, HMM holds 15 new shipbuilding orders totaling 138000 TEUs.
Hapag Lloyd’s net profit for the first half of the year was 790 million US dollars
In the first half of 2024, Hapag Lloyd achieved a revenue of 9.52 billion US dollars, a year-on-year decrease of 12.3%; EBITDA was $1.97 billion, a year-on-year decrease of 47.8%; EBIT decreased by 68.2% year-on-year to $880 million; In the first half of the year, a net profit of 790 million US dollars was achieved, a year-on-year decrease of 74.8%.
Hapag Lloyd stated that due to significant changes in the consolidation market after the end of the pandemic, its performance in the first half of 2024 was significantly lower than the previous year’s level. However, due to increased demand and rising spot freight rates in the second quarter of 2024, its performance also exceeded initial expectations.
In the field of liner shipping, in the first half of 2024, Hapag Lloyd’s container volume reached 6.097 million TEUs, an increase of 5.0% year-on-year; The average freight rate per box is 1391 US dollars, a year-on-year decrease of 21.0%.
In the terminal and infrastructure sector, in the first half of 2024, Hapag Lloyd achieved revenue of $220 million, EBITDA of $71 million, and EBIT of $33 million.
Although we were unable to achieve the outstanding performance of the previous year, Hapag Lloyd achieved very good results in the first half of 2024 due to strong demand and better spot freight rates, “said Rolf Habben Jansen, CEO of Hapag Lloyd.” Hapag Lloyd has added several new ships and containers to its fleet, which helps to meet the additional capacity demand caused by the Red Sea crisis and maintain the integrity of its supply chain
Given the positive performance in the first half of 2024, Hapag Lloyd has once again raised its expectations for the fiscal year 2024. It is expected that the group’s EBITDA will be between $3.5 billion and $4.6 billion (€ 3.2 billion to € 4.2 billion), and the group’s EBIT will be between $1.3 billion and $2.4 billion (€ 1.2 billion to € 2.2 billion). However, considering the fluctuations in freight rates and geopolitical challenges, there is still considerable uncertainty in this forecast.
In short, although Hapag Lloyd stated in its “2030 Strategy” that it is still committed to a pure shipping company strategy, consolidating its position as one of the top 5 global shipping companies, and partnering with Maersk’s “Gemini” by exiting the THE alliance, it promises to become the undisputed quality first goal for its customers. However, compared to its direct competitors EVA Shipping and the remaining three members of THE Alliance, ONE, Yangming Shipping, and HMM, Hapag Lloyd’s profit margin and performance are relatively poor.
According to the latest data from Alphaliner, among the top 100 global shipping companies in terms of capacity, Hapag Lloyd ranks 5th globally with 286 operating vessels, including 127 self owned vessels and 159 leased vessels, with a total capacity of 2.174 million TEUs. In addition, Hapag Lloyd holds 12 new shipbuilding orders, totaling 191000 TEU of new shipbuilding orders.