WITH the Q2 earnings season reaching its finale, a recent Alphaliner survey shows the profitability growth of the biggest carriers greatly exceeds that of the small and medium-sized lines.
Moreover, the consultant suggests, a "two-tier market" may be developing between the contract-focused carriers and those that tap the short-term and spot markets for their liftings.
As the European Commission begins its review of the liner Consortia Block Exemption Regulation, to decide if it should be extended after it expires in April 2024, the commissioners will no doubt take this growing profit imbalance into consideration, reports UK's The Loadstar.
"Earnings for the medium and small lines typically increased by between 100 per cent and 700 per cent between 2019 and 2021," said the consultant. "By contrast, the top 10 carriers increased their profits by between 1,000 per cent and nearly 6,000 per cent."
And, "following widespread consolidation at the top of the table", Alphaliner said, "there is now a large gap between the leading carriers and the rest of the field".
Noting that liner consolidation had "attracted the attention of politicians and regulators", Alphaliner compared the industry in 2017 with the current market. Currently the top ten carriers are operating 21.8 million TEU of capacity, while the next 20 lines have a combined capacity of just 2.5 million TEU.
In contrast, five years ago in mid-August, the cumulative capacity of the top ten carriers was 15.4 million TEU, with 3.2 million TEU of capacity operated by the lines ranked 11-30.
Alphaliner added that the gap between the current leading carrier, MSC ,with its 4,476,201 TEU of capacity, and 20th-ranked SM Line, with 93,410 TEU, had grown by over 1million TEU in the past five years.
"Further emphasising that consolidation has been concentrated at the very top, the number of 'supercarriers', operating more than 1 million TEU, has risen by just one, from six to seven in the past five years," said Alphaliner, adding that this was due to the merger of three Japanese lines into ONE, rather than due to growth from lower-ranked carriers.
Meanwhile, Alphaliner noted, some Asian lines that grew their profits more rapidly than their peers, due to their greater exposure to the transpacific spot market, are now seeing their earnings decline more quickly.
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