Now that bigger container ships are making their way to Charleston and other East Coast ports and industry consolidation is helping to reduce overcapacity, the world's shipping lines are reversing trends that led to $10 billion in losses during 2016.
They're still losing money but at a much slower pace than last year. And by the time the second quarter winds down at the end of this month, global shipping lines are expected to be back in the black, according to estimates by the Drewry consulting firm, which estimates a year-end profit of $1.5 billion industry-wide.
"Exceptionally strong demand growth in the first quarter of 2017 and far higher annual contract rates will create even more profitable conditions for the remainder of the year than we had envisioned," Drewry said in a report last week.
Shipping analyst Alphaliner last week provided more good news, nearly doubling its projection for year-over-year cargo growth worldwide to 4.6 percent. The revision was based on an unexpectedly strong first quarter, and Alphaliner said if the trend continues "the full-year figure may be adjusted further upwards" to levels not seen since 2014.
Strong performances at Chinese, North European and North American ports — which, combined, account for half of global trade — is driving the year-over-year growth, Alphaliner said.
The Port of Charleston has far outpaced North American ports as a whole, with nearly 17 percent growth in cargo during the first three quarters — more than double the continent's average, according to Alphaliner. Charleston also saw record growth in April, with volumes 20 percent better than a year earlier.
"Our growth is broad-based with good import-export balance," said Jim Newsome, president and CEO of the State Ports Authority. When the fiscal year started in July, the maritime agency set what appeared to be an aggressive goal of 6 percent growth. Through April, volume was up 10.2 percent.
"While we expect to see container trade growth moderate over the foreseeable future, the port is well-positioned to surpass our volume goals this fiscal year," Newsome said.
Most of the major shipping lines saw higher revenues during the first quarter, led by CMA CGM's 36 percent growth due in part to its acquisition of Neptune Orient Lines. Maersk Line, the world's largest container shipping firm and the Port of Charleston's biggest customer, saw 10 percent revenue growth but it still lost $42 million during the first quarter.
Moody's Investors Service said in a report that the industry's financial woes have started to bottom out. Drewry added that while most carriers will have to wait slightly longer for profits to roll in, "all the indications are that they will be very pleased with the results from the second quarter onwards."
That's good news to Newsome, who said the SPA has had a tough time raising rates it charges to shipping lines because of their recent financial woes.
"It's a lot easier to raise rates when they're making money than when they're losing money," he said. "They lost $10 billion as an industry last year, and that makes it very difficult. I'm hopeful they start making money."