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AP Moller-Maersk released its Q3 report on November 2, in which it said that revenues were up 37.1% at $22.8bn and EBITDA was up 56.4% at $10.9bn. Maersk reported that its average container shipping contract rate would be around $1,700 per feu higher in 2022 than in 2021, and that contracts would cover 71% of its approximately 9.5m feu volumes for 2022. Contract cover did not change from 2021, but volumes are down by nearly 0.5m feu “driven by lower end-consumer demand”. The group’s full year 2022 guidance is for underlying EBITDA of $37bn and free cash flow of over $24bn. In the final remarks of its investor presentation may be found the statements, “We have seen peak Ocean rates and the expected normalisation has begun” and “We are entering a challenging period in the years ahead with a strong balance sheet.” Hapag-Lloyd followed on November 10. It reported that, for the first nine months of 2022, its volumes “remained flat”, being 0.1% higher than for the first nine months of 2021 at 8.987m teu. Higher volumes in Africa, it said, were offset by the recent slowdown in East-West trades. Hapag-Lloyd reported that that freight rates “increased strongly due to the shortage of transport capacity”. Hapag-Lloyd did report weakening demand and easing of port congestion, with spot freight rates from China dropping clearly since August and expected to drop further in Q4. Revenue for the first nine months this year was $28.44bn compared to $17.95bn for the same period last year, while profits were up from $6.66bn to $14.67bn. Hapag-Lloyd did report that costs increased in 2022 due to higher bunker prices, congestion and higher vessel charter rates. Free cash flow of $14.28bn was more than double the $6.6bn for the previous year. CMA CGM reported its Q3 results on Friday, with net profit for the quarter up 25% to $7.04bn and for the first nine months of 2022, $22bn, a record surpassing even the full year $17.9bn profit of 2021. Net debt, a worry for some analysts when CMA CGM spent $800m on agency businesses in 2019, was reduced to just $78m in the quarter, compared to $5.3bn in June. The Saadé family-owned business warned that weaker macroeconomic prospects and falling demand for freight transport would affect its Q4 business with freight rates falling to “more normal levels”. In its earnings statement, it wrote that energy costs will remain high, affecting its own operating margin and consumer demand in Europe. Container shipping demand is certainly facing an unseasonably weak final quarter if recently reported trends continue. CTS data suggests that US containerised imports have fallen back to their average levels for 2017-19, while European import volumes are below the average for 2017-19. European box exports fell to 2.32m teu in September, continuing a falling trend since a peak of 2.53m teu in May. Containerised exports from North America fell from 1.15m teu in August to 0.99m teu in September. Not rounding the data up to 1m teu is important because it’s the first sub-1m teu month since 2016. North American containerised imports fell to 2.44m teu in September from 2.8m in August, making September the lowest month since May 2020 when the country was in partial lockdown. Global container trade fell 10% in September to 13.51m teu compared to August’s 14.61m teu, the biggest month-on-month fall for years, excluding the original pandemic shutdown in April 2020, and the usual January / February seasonal reduction. It was also the biggest year-on-year fall for a single month, at 8%, since 2009 when the global financial crisis was biting. Drewry data shows that cancelled sailings on the transpacific, transatlantic, Asia-North Europe and Asia-Med services will take out 105 of 725 scheduled sailings in weeks 48 to 52 this year. 59% of cancellations are on the transpacific trade. For comparison, between weeks 38 and 42, 122 out of a total of 750 voyages were cancelled, of which 68% were transpacific. Wind the calendar back to July 2020 when container markets were starting to boom, and Drewry was reporting only 20 cancellations out of 468 scheduled voyages, just 4% of a smaller total. The Freightos Baltic Exchange Global Container Index reflects recent demand conditions, falling throughout November to stand at $2,786 compared to $3,340 a month earlier and $9,351 a year earlier. On the main headhaul Asia-Europe route, costs have fallen by a fifth from around $5,150 a month ago to $4,074, a long way from $14,350 or so at the end of November 2021. As European demand falls, congestion is tumbling, but shippers report problems with getting empty boxes back to Asia still, this time due to a lack of goods to fill them, leading to a slump in eastbound rates from Europe, which stand at $862 on November 25, having flatlined since mid-October but down from $1,200 as recently as early September. Trans-Pacific shipping costs reflect easing congestion and lower demand in the US. Rates for China-USWC have fallen to $1,935 by November 25, having flatlined for most of October and November around $2,500, and hugely down on $14,680 a year previously. On the all-water China-USEC service, rates were down to $4,585 as of November 25 compared after a slight increase to $6,300 or so early in the month, itself a brief respite from a year long fall from nearly $20,000 in November 2021. In the Atlantic, westbound rates from North Europe to USEC have continued the trend after rallying in October to a peak of $7,750. By November 25 they stood at $6,527, compared to $ 7,451 a year earlier. On the reverse route, rates have risen and fallen in October and November, first expanding a whopping 50%, from around $580 to $870 in the month to October 21, before losing 28% in the weeks to November 25, ending up at $623. Last month we wrote that time charter rates could do with some stability. The Harper Petersen Harpex Index of 12-month time charter rates has stabilised at around 1,500 points in November, having peaked at around 4,500 points in March. That translates into a 12 month time charter rate of $58,000 a day for a modern 8,500 teu vessel, $26,000 a day for an older panamax dimension 4,250 teu ship, and $21,000 a day for a 2,700 teu feeder. If the liner companies find their gloomy prognostications for 2023 to come true, then they will be negotiating next year’s time charter renewals at lower levels than this.

Thanks for the container party, time to go home

Dim box prospects ahead.

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