Cosco Shipping rides market tailwinds to 2024 earnings bonanza
Net profits of the container shipping and port unit more than doubled last year amid a market boom largely fuelled by the Red Sea crisis
CSH has highlighted Red Sea disruptions as a key market factor, which has led to a shortage of effective shipping capacity and kept spot rates highly elevated
COSCO Shipping Holdings, the container shipping and port unit of Chinese state conglomerate China Cosco Shipping Corp, has projected a net profit of Yuan49.1 bn ($6.7bn) for 2024, representing a remarkable 105.7% year-on-year growth.
CSH, controller of the world’s fourth-largest boxship fleet, also expects earnings before interest and taxes to reach Yuan69.9bn last year, up 90.7% from the whole of 2023, according to the company’s announcement.
The Shanghai- and Hong Kong-listed firm attributed its robust growth to both the increase in box shipping rates and volumes, amid a market boom triggered by the Red Sea rerouting as well as demand increase from important consumer regions, such as the US and Europe.
“In 2024, the container shipping market saw moderate growth in overall cargo volumes. However, factors such as the escalation of the Red Sea situation have led to a shortage of effective capacity, keeping market freight rates relatively high,” said CSH.
CSH has not disclosed its latest operating results, but data from one of its key container shipping subsidiaries, Orient Overseas Container Line, revealed that revenue from its transpacific and Asia-Europe routes increased by 61.7% and 75.4% respectively, in the fourth quarter.
However, as the Chinese New Year approaches, the market appears to be facing pressure. The Shanghai Containerised Freight Index dropped 8.6% last week, marking its largest decline since late November.
On January 8, a potential strike by port workers on the US east and Gulf coasts was averted after a preliminary agreement was reached between the union and carriers, removing a significant driver for freight rate mark-ups.
Moreover, news about progress being made in Gaza peace talks from the Middle East have raised concerns that vessel capacities absorbed by the Red Sea crisis could be released back into the market at some point this year as services resume.