Container shipping saw a monumental turnaround in financial fortunes in the first quarter, with the industry swinging from what was nearly a $700 million loss to close out 2023 into a $5.4 billion net profit to start the year.

The quarter is still well off the $13.7 billion profit taken in the year-ago period, according to analysis from container shipping expert John McCown, non-resident senior fellow at the Center for Maritime Strategy. But the total marks a serious reversal of what was six straight quarters of net income declines, leading into the first quarter net loss.

More from Sourcing Journal

• South Carolina Ports Briefly Shut Down, Citing 'Software Issue'

• Dali Vessel Responsible for Baltimore Bridge Collapse Moved from Crash Site

• Panama Canal Traffic Improving but Schedule Reliability Still 'Disappointingly Low'

Like the previous overflow of record profitability the industry experienced starting in the fourth quarter of 2020 through 2022, increasing freight rates were the top contributor to the spike to start 2024, McCown observed. Industry observers had been expecting ocean carriers to generate another short-term windfall as the ongoing Houthi missile attacks on commercial vessels in the Red Sea lingered.

These freight rates escalated from their 2023 lulls when the attacks began, forcing ocean carriers like Mediterranean Shipping Company (MSC) and Maersk to reroute their ships away from the waterway around southern Africa.

“That key [Asia-to-Europe] lane represents some 25 percent of global container miles and the one-third increase in typical voyage distance has the effect of shrinking worldwide capacity 8 percent,” said McCown.

According to calculations from maritime trade advisory service Sea-Intelligence, the average minimum transit time from the two sub-regions of Asia (north and southeast) to the three sub-regions of the Mediterranean (east, west and central) in the January-to-March period increased by 39 percent compared to the average during July-to-December 2023.

When it comes to the individual container lines, there is some variance as far as quarterly performance goes, with Cosco Shipping taking the top spot at $785 million in net income. Of the ocean carriers that report their numbers, Maersk had the only net loss at $166 million.

Seven of the 11 companies analyzed by McCown had lower net income when compared to the start of 2023, while four had a higher profit level. All 11 companies had decreases in comparisons of the last 12 months to the prior period.

“In contrast, most of the pandemic era quarters had tighter spreads among the companies,” McCown said. “The widening differences among the companies are primarily due to customer mix, trade lane mix and vessel utilization. Carriers whose volume is more concentrated in the key east-west trade lanes of Asia-Europe and Asia-North America showed the most robust sequential improvement in Q1 2024 compared to Q4 2023. Those were the lanes with the most pricing improvement.”