Tiếng ViệtForeign container shipping companies continue to achieve record financial results in the post-Covid-19 era. Their profit margins are higher than ever, even during the period of highest shipping rates.
Foreign container shipping companies continue to achieve record financial results in the post-Covid-19 era. Their profit margins are higher than ever, even during the period of highest shipping rates.
South Korean shipping company HMM (Hyundai Merchant Marine) reported a net profit of approximately $1.95 billion in the third quarter of 2022, a 13.3% increase compared to the same period the previous year. The company’s revenue also rose by over 27% to around $3.83 billion year-on-year.
Prior to this, in the first two quarters of the year, the company reported a net profit of $4.6 billion across all business sectors, a more than 15-fold increase compared to the same period last year. Despite negative factors such as rising fuel prices and declining freight rates, favorable market conditions and efforts to improve profitability have contributed to the company’s flourishing business operations.
Similarly, during the first nine months of 2022, Chinese shipping company Cosco’s throughput, as reported, decreased to 18.5 million TEUs (twenty-foot equivalent units) from 20.4 million TEUs the previous year. However, revenue increased by 37% year-on-year, reaching $44.46 billion, and net profit rose by 48% to $16.2 billion.
According to executives at Cosco Shipping Holdings, the profit margins of shipping companies today are much better than in 2007, although the percentage of new ship orders for the fleet is not close to the 64% seen in 2008. They believe that in the near future, more mega container vessels with capacities ranging from 5,000 to 15,000 TEUs will be built, optimizing and upgrading the overall structure of the shipping fleet. They emphasize that Cosco will adjust its vessel capacity according to market demand.
In reality, shipping companies have achieved high profits during the congested logistics period. Despite the hardships and bankruptcies faced by many industries during the past three years of the Covid-19 pandemic, logistics, especially international container shipping companies, have continuously thrived. In 2021, global shipping companies placed a record-breaking 561 new ship orders, quadrupling the number from 2020.
Nguyen Ly Truong An, a logistics expert from SeaAir Global, mentions that while Vietnam does have international shipping companies, most domestic shipping companies focus on domestic routes and breakbulk cargo, with little involvement in container shipping. Meanwhile, Vietnam’s import and export activities have been consistently growing, and despite the difficulties caused by the pandemic, the trade volume has not decreased compared to previous years. As a result, the international transportation of containerized goods depends on foreign shipping companies. Vietnamese businesses struggling with exports and facing severe container shortages during the pandemic have had to accept high freight rates, but the resulting revenue does not flow into the pockets of domestic shipping companies, but rather into the coffers of foreign shipping companies. This situation is unfortunate for Vietnamese goods.
According to Nguyen Ly Truong An, currently, shipping companies and ports have completed their price increases through various surcharges. Many shipping companies almost have a monopoly and have the ability to impose different types of fees on businesses. Additionally, while transportation rates have decreased due to the absence of Covid-19, they still remain high. Therefore, although the volume of import and export goods has decreased, the increased prices have led to significant revenue growth for shipping companies. Furthermore, although ocean freight rates have decreased on some routes, they have not decreased across all routes. This contributes to the overall increase in shipping companies’ total profits, making it difficult to reduce them.
“We have many advantages if we can proactively deploy our international shipping fleet, leverage deep-water ports, goods, and geographical location. However, we lack the human resources, such as crews and captains. In addition to the government’s plan to develop the shipping fleet, there needs to be a focus on strategic human resource training and increased investment in technology to meet the objective requirements of development,” suggests Nguyen Ly Truong An.
