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DESPITE the predictions of declining spot rates, Blue Alpha Capital founder John McCown is forecasting liner shipping will see a 50.6 per cent increase for full-year net profit to US$223.4 billion, reports Singapore's Splash 247.
Mr McCown estimates that the amount of containers shipped via the spot market is at most 20 per cent, and although spot prices have been falling all year, long-term rates remain strong.
"Much is now already baked in for 2022 financial results. I suspect the folks who focus on spot rates and have been predicting a near-term earnings collapse will be surprised by the actual third-quarter results," said Mr McCown.
"They will likely be even more surprised by fourth-quarter results as they haven't been focusing on the more relevant aggregate pricing metrics. As such, they are substituting narrative for analysis, as no earnings collapse is imminent."
Mr McCown estimates liners made a combined net profit of US$58.9 billion in Q3, a 22.4 per cent improvement over the same period a year ago.
Compared sequentially to Q2, net income was 6.6 per cent lower to $4.1 billion.
Said the new container report: "The 2Q22 actual results can now be recognized as the peak in terms of earnings. There will be further declines from 3Q22 in quarters to come."
Mr McCown showed how the industry's profits beat Facebook, Amazon, Netflix, and Google (FANG), favorites of the capital markets.
Container shipping industry profits were 14 per cent higher than total FANG profits in Q4 last year, 103 per cent higher than FANG profits in Q1 this year, and 145 per cent higher than FANG profits in Q2.
For Q3, that gap has expanded more as container shipping industry profits have increased to 158 per cent above total FANG profits.
https://www.shippingazette.com/menu.asp?encode=eng
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