By Gavin van Marle

Just how much money would container shipping lines be losing if it weren’t for the relentlessly steep decline in bunker prices? A lot, according to the latest analysis from Drewry Maritime Research, which investigated the revenues and margins of 16 of the 20 largest carriers that publish their accounts.

Drewry calculates that the group, which represented 65 per cent of global slot capacity, saw revenues of around $60bn in the first half of the year, 5 per cent less than in the first six months of 2014. Only Taiwanese carriers Wan Hai, a specialist on niche trades such as intra-Asia, and Yang Ming managed to increase sales year-on-year. The decline was the result of low demand combined with low freight rates.

However, it is a mark of how decisive fuel costs have become to the liner shipping industry that, despite this decline in revenues, operating profits in the same period actually tripled: the 16 carriers posted combined operating profits of $3.3bn, compared with $1.1bn during the first six months of 2014, as margins increased from 1.7 per cent to 5.6 per cent in the first half of this year.

In January 2014, the average price of one tonne of IFO380 bunker fuel bought at Singapore or Rotterdam was just under $600, a year and a half later in July, it had dropped by almost two-thirds to marginally under $250 per tonne.

Drewry wrote on September 21: “The change in direction that fuel costs has taken means that carriers’ costs are falling faster than freight rates, enabling carriers to continue posting profits, albeit shrinking with each passing quarter. “Drewry estimates that industry-wide unit costs fell by about 11 per cent in the first-half 2015 versus the same period last year, whereas unit revenues were down by approximately 7 per cent.”

It added that while few carriers provided much insight into their cost structures, CMA CGM gave a detailed breakdown of its costs in its most recent results:

Cost type

Year-on-year change

Share of total cost


6 per cent

28 per cent


-33 per cent

16 per cent

Vessel charters & slot purchases

9 per cent

13 per cent

Inland & Feeder transport

8 per cent

13 per cent

Container rentals & logistics

0 per cent

9 per cent

Port & canal fees

4 per cent

8 per cent

Employee benefits

-4 per cent

8 per cent

General & admin expenses

-6 per cent

5 per cent


-5 per cent

100 per cent

Source: CMA CGM via Drewry Maritime Research

The table shows that the French line reduced the costs over which it has direct control – wages and office expenses – but the massive influence of the 33 per cent decline in bunker costs mitigated the fact almost every external supplier to the carrier managed to increase their revenue from CMA CGM. It further demonstrates how carriers have to gain greater control over pricing and capacity in the long-term, should fuel costs begin to ascend to previous levels; although Drewry thinks this is unlikely this year.

“Based on prevailing fuel and rates in the third quarter 2015, we expect the story will be much the same, i.e. diminishing profitability, meaning that the accumulation over the first nine months will be enough for carriers to walk away with okay profits for the full year, regardless of what happens in the fourth quarter.”

Reprinted courtesy of The Loadstar (