COSCO is expecting to report a 2023 net profit 80 per cent year-on-year drop in operating profit to US$3.9 billion, reports New York's Journal of Commerce.
The decline was blamed on excess capacity, geopolitics and plunging freight rates.
The supply-demand imbalance that built steadily through 2023 has clearly brought the two years of big profits to an end.
Cosco, the parent company of Cosco Shipping and OOCL, said its anticipated earnings before interest and taxes (EBIT) of $5.1 billion for last year would represent a decline of 78.54 per cent from 2022.
"In 2023, as the container shipping industry faced multiple challenges such as the weakening of transportation demand, the increase in supply of shipping capacity and geopolitical tensions, the level of market freight rate dropped significantly compared to that of last year [2022]," Cosco said.
The carrier group has forecast a 2023 net profit of $3.9 billion, down 78 per cent on the $18 billion net for 2022.
Paris-based container consultancy Alphaliner said the decline in earnings in 2023 exceeded the decrease in ocean rates. The China Containerised Freight Index, a combination of spot and contract rates, averaged 937.29 points through 2023, down 66 per cent on 2022.
"The result indicates a group operating profit of just CNY3.4 billion (US$474 million) for the Chinese operator in the final quarter of the year, less than half the CNY8.5 billion reported for Q3 2023, though results are likely to improve in the current period following the spike in rates from service disruption in the Red Sea," Alphaliner said.
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