The container shipping industry saw a profit of $5.4 billion in the first quarter of 2024, marking a significant turnaround after six quarters of decline. This reversal was largely due to higher rates as a result of Red Sea diversions and stronger than expected volumes. Long voyages led to an 8% decrease in global capacity, while volumes increased by 9.2% compared to the same period last year.
John McCown, a liner industry expert, pointed out that the unexpected rise in volume has driven prices up, with the Red Sea situation playing a key role in the price increase. The industry’s recovery comes after a sharp decline from peak profits of $63.1 billion in the second quarter of 2022 during the pandemic. McCown emphasized the industry’s rollercoaster results, with pricing as a key driver in both the record-breaking profits and the recent turnaround.
McCown’s report also highlighted the significant impact of the pandemic on supply and demand dynamics, which have influenced pricing in the sector. This shift follows a prolonged period of chronic overcapacity dating back to the 2008 financial crisis. The industry’s recent recovery comes after seven consecutive quarters of record-breaking net profits, driven by price increases resulting from the Red Sea situation.
