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How profitable is the transport of goods by sea, compared to air. Expert: The profits of shipping companies are “sirens” for investors

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Maersk recorded a record first quarter with revenue of $ 19.3 billion, up 55% year-on-year. And this year it is heading for massive profits, despite an accounting loss of 0.72 billion Euros in Russia. The logistics giant is in talks with potential buyers for operations in Russia, points out XTB analyst Claudiu Cazacu, noting that although the situation in Ukraine has affected both maritime flows and airspace routes, and uncertainty has increased, restrictions in China along with the return consumption has led to massive jumps in transportation costs.

Thus, the revenues of service providers have grown rapidly and strongly.

Cumulatively, according to the same consulting firm in the field, container carriers would obtain in these two years (2021-2022) over 500 billion Euro operating profit (half a trillion Euro).

French operator CMA CGM, the third largest in the world in terms of container transport capacity, posted a net profit of 18 billion euros last year. The money would be enough to buy the entire air operator Air France – KLM, with a capitalization of less than 1.3 billion Euros at the end of Tuesday’s meeting.

On the other hand, the remaining amount would be enough for Ryanair to take over, for example, at a capitalization of 15.72 billion euros, according to the closing on Tuesday.

If it decides to buy Lufthansa, it will use less than half of the profit to take over the market-valued company at 7.89 billion Euros.

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However, the French operator’s ambitions are not so great … for now.

Its intention is to take over 9% of the company and to consolidate its presence on the air freight market, through a partnership with Air France – KLM. It will operate both specific cargo planes and cargo capacity inside passenger aircraft.

The movement has arguments, looking at the market trend: if the demand for container transport has decreased, in volume, by 1.2% this year, after a jump of 8% last year, for air freight there is an increase of 2.9% globally.

The French operator is not the only one trying to expand into the logistics field, participating in a trend that seems inspired by Amazon a few years ago and FedEx, relatively more recently.

Mediterranean Shipping Co. Alitalia’s successor to the ITA is trying to take over a stake in the ITA, while the main shareholder of the German carrier Hapag Lloyd has reached 10% of Lufthansa.

Maersk is developing both its own airborne cargo fleet and the acquisition of logistics operator Senator International.

By offering integrated services, carriers hope to get a bigger slice of customers’ budgets.

About 10 to 12 percent of global container capacity is blocked around or in ports around the world, according to Maersk CEO, in a May 4 interview.

Transportation prices, which are still particularly high relative to the historical average, are still falling from a peak: from more than 11,109 on September 10, 2021, the FBX index fell to 8,466 on May 20. By 2021, however, it had not been above 3,000.

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But investors are looking to the future. China has suffered sharp and severe declines in restricted areas of major cities such as Shanghai and Beijing.

Goldman Sachs changed expectations for default in the Chinese real estate sector with a 31% probability compared to the previous 19.6% for the riskier bond segment in the sector. The previous pessimistic scenario has now become the baseline scenario.

At the same time, the IMF warned of the inflationary pressures added by the high cost of transport and logistics, with an impact especially on low-income countries and islands.

From the perspective of container carriers, the diversification allowed by spectacular profits is a better move than in the past, with too much investment in shipbuilding sometimes leading to overcapacity.

On the other hand, the reorientation of available capital flows towards a partially correlated sector does not mean a “total” diversification.

Signs of a slowdown in the global economy, and, in some regions, growing risks of recession, mean that by 2023, the landscape may be less optimistic, and optimal decisions may in fact be to build up reserves. , or return of capital to investors.

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