Container liner operators suffered their worst financial quarter for five years before the Red Sea crisis erupted.

Operating margins of nine of the largest container carriers dropped into negative territory in the final three months of 2023.

Average margins slipped to -3% in the first negative result by the industry since 2018, according to Alphaliner.

That was due to losses racked up by several big operators.

Six of nine companies reported operating losses, with Germany’s Hapag-Lloyd and Japan’s Ocean Network Express doing so for the first time.

Operating margins are a key profitability ratio, in which higher margins are generally better.

The performance of the liner sector in the final quarter was worse than the -0.2% average reported in the decade before Covid, the analyst noted.

Evergreen Marine Corp was one of only three carriers to remain in the black in the quarter with an operating margin of 7%.

The Taiwanese company reported a net profit of TWD 35.3bn ($1.1bn) for 2023. That was still 90% below the previous year’s profit of TWD 334.2bn.

But the company remained profitable at an operating and net level in each quarter of 2023.

South Korean operator HMM also narrowly avoided a loss, while China’s Cosco Group is expected to have a positive quarter after cost-cutting, according to Alphaliner.

Worst performer

Danish giant AP Moller-Maersk logged the worst operating margin in the final quarter.

Its quarterly margin dropped to -12.8%, but remained positive for the year with a margin of 6.6%, Alphaliner said.

Israeli liner operator Zim and Taiwan’s Yang Ming Marine Transport and Wan Hai Lines also reported operating losses and negative margins over the full year.

Wan Hai recorded a net loss of TWD 5.8bn for 2023, hugely down on the net income of TWD 93.1bn in the previous year.

The Taipei-based liner, which is ranked number 11 globally, reported an operating loss in each of the four quarters.

Over the full year, the nine carriers’ average margin was positive at around 4%, Alphaliner estimated.