State of Logistics 2024: Ocean Cargo

First quarter 2024 financial results show steamship lines losing money two quarters in a row—something that hasn’t happened in five years.

The culprit: lower average freight rates in an environment that saw stronger-than-expected world merchandise trade and demand for cargo shipping due to a rebound in consumption and inventory rebuilding following 2023 lows.

CMA CGM recorded revenues of $11.8 billion in the first quarter of 2024, a 7% decline from the fourth quarter of 2023. Its EBITDA was $2.4 billion, down over 30%. CMA CGM transported 5.6 million TEU in the first quarter, up 11.7% year-on-year.

OOCL’s revenues were down 9% in the first quarter to $1.98 billion compared to the same period in 2023, despite a 3.4% increase in the total volume of goods transported. Maersk’s revenue decreased by $1.9 billion, while Hapag-Lloyd Group’s revenue fell over 23% to $4.62 billion. There were exceptions. For example, HMM reported $1.7 billion in revenue in the first quarter,
a 12% increase over the same period last year.

Characterizing the first quarter of 2024 was a rebound in spot freight rates caused primarily by disruptions in the Red Sea region. Attacks on ships by the Houthis have resulted in many ships taking the long route around the Horn of Africa, thereby increasing shipping times and costs. S&P Global Market Intelligence reports that 79% of container ships now transit around Africa’s Horn.

“Increased journey times via the Cape of Good Hope have reduced available shipping capacity, coinciding with a resurgence in demand,” said CMA CGM in a statement.

Some carriers are struggling to keep weekly services. Alphaliner analyst Stefan Verberckmoes puts it this way: “The situation in the Red Sea has soaked up all the excess capacity.” Ocean carrier executives, however, are spinning these negative reports and stating that the industry has returned to “normalization.”

Mid-2024: Ocean Top 10

Rodolphe Saadé, chairman and CEO of the CMA CGM Group, for example, emphasizes its “agility and resilience by staying on course with its strategic investments, whether in decarbonization or artificial intelligence.” In the first quarter of 2024, CMA CGM and its partners also extended their OCEAN Alliance until 2032

Maersk and Hapag Lloyd announced in April their intentions to launch Gemini Cooperation, effective February 2025. The new alliance coincides with Hapag Lloyd’s announcement in January that it will withdrawal from THE Alliance, effective January 2025. That same month, the MSC-Maersk 2M cooperation will end and MSC will operate as a standalone.

To make up for lost capacity from the withdrawal of Hapag-Lloyd, THE Alliance partner HMM is increasing its vessel capacity from 920,000 TEUs in 2024 to 1.5 million TEUs by 2030.

Meanwhile, an unprecedented number of new ships are coming online. BIMCO reports that 478 container ships with a capacity of 3.1 million TEU are scheduled for delivery. BIMCO estimates the container fleet capacity will grow by 10% in 2024.

The Ocean Alliance, a partnership between CMA CGM, COSCO, Evergreen, and OOCL, launched its “DAY 8 Product” in April that involves the deployment of 321 container ships, including 119 vessels for the CMA CGM Group, with a total capacity of approximately 4.5 million TEUs and 35 services on important global trade routes.