In 2017, the container shipping industry saw much improvement over its dismal performance in 2016. Thanks to increases in operational efficiency, new shipping alliances, and increasing freight rates, the world’s leading container shipping lines reported steady profits, in every quarter of 2017. For many investors, this has improved their outlook on the industry’s long-term potential and consistent profitability.
When the global financial crisis erupted, and cargo rates spiraled downward, container shipping lines had to focused on ways to save money. This led to investment into finding and implementing more efficient ways to operate their extensive fleets of shipping containers and vessels. The result has been more productive and profitable operations on the world’s trade routes in 2017.
Partnerships and alliance have played an important role in the improvement experienced by container shippers in the past year. It has allowed shipping lines to improve their presence on new and existing lanes. A prime example is Hapag-Lloyd’s purchase of the United Arab Shipping Company (UASC). This investment gave Hapag-Lloyd greater access to the profitable, emerging South American trade market and contributed to greater profits in 2017.
Rising cargo rates
The increasing number of alliances and partnerships has reduced competition on some trade lanes, and in doing so it has caused a rise in container rates. Although they are nowhere near what they were a decade ago, the boost in the last year (2017) has had a positive effect on container shipping profits and investor’s confidence.
There was little doubt that the container shipping industry would recover from the sudden drop in worldwide demand after the global financial crisis. What analysts were unsure about was how long it would take to recapture the glory the industry’s leaders enjoyed prior to 2008. But, when we review the improvements and big changes seen in 2017, we believe that investors can expect favorable growth in the coming years and have a positive outlook on the future of container shipping.