Container Shipping Industry Q1 2025: Profit Decline Amid Red Sea Crisis
The container shipping industry reported a net profit of $9,9 billion in the first quarter of 2025, which represents a significant decrease from previous quarters, although it still reflects historically strong performance.
According to John McCown’s report on Container Shipping Sector Quarterly Financial Results, the earnings for Q1 indicate a 36,4 % decline from the $15,6 billion profit recorded in Q4 2024. However, compared to the first quarter of 2024, the industry experienced an 82,8 % increase from the $5,4 billion profit reported during that time.
Source: wikipedia
The profits for the first quarter mark the second consecutive decline after three quarters of growth following a net loss in Q4 2023. These fluctuations are largely attributed to the crisis in the Red Sea, which has led to ships rerouting around Africa, reducing global shipping capacity by 8 %, according to McCown.
The situation in the Red Sea has particularly affected the Asia-Europe trade lane, which accounts for about 25 % of global container miles, resulting in longer routes that have significantly impacted pricing and capacity.
At the same time, container volumes have shown consistent growth, with Q1 2025 reporting a 4,5 % year-over-year increase following several quarters of strong volume growth, including previous quarterly increases of 6,6 %, 4,6 %, 5,9 %, and 7,7 %, respectively.
The report also emphasizes the remarkable profitability of the container shipping industry since the pre-pandemic era. McCown notes that from 2016 to 2019, the sector incurred losses of $8,5 billion on revenues of $681,2 billion, resulting in a negative margin of 1,3 %. In contrast, the following five years saw significant improvements, with net income margins reaching 8,1 %, 36,8 %, 42,7 %, 9,6 %, and 18,3 % from 2020 to 2024, respectively.
“While the $9.9 billion in net income for Q1 2025 was well below the 11 quarters during the pandemic and the previous three quarters affected by the Red Sea situation, excluding those periods, the Q1 2025 profit exceeds what the container shipping industry earned in any previous full year,” McCown writes.
“Similarly, the 12,5 % margin in Q4 2024 is many times higher than the net income margin in any quarter prior to the pandemic.”
Looking forward, McCown anticipates that the trend of declining earnings will continue into the second quarter of 2025, although projections for the second half of the year remain uncertain.
