South Korean liner giant HMM has waved goodbye to an era of record profits and warned that container freight markets will continue to cool. The Seoul-based carrier logged a net profit of KRW 2.6trn ($1.9bn) for the third quarter, 11% down on the record KRW 2.9trn in the previous three months.

The company expects a further unravelling in the coming months of factors that have underpinned container markets. It expects container demand to be under downward pressure due to considerable uncertainties related mainly to widespread inflation, economic slowdown, and geopolitical tensions. “Weakening purchasing power and increased inventory of major retailers would also negatively affect global container volumes,” it added.

Revenues remain relatively stable at KRW 5.1trn for the third quarter, despite the slump in container freight rates. But port congestion and inland logistics bottlenecks in main locations have been alleviated, which had the effect of increasing capacity in the entire supply chain.

Container rates on major east-west trades where HMM operates have gone into freefall in recent months. Spot rates on the trade from Asia to the US West Coast were $2,479 per 40-foot equivalent unit, down 87% compared with the same week last year, according to the Freightos Baltic Index. Nevertheless, the company has enjoyed the benefits of the historically high market.

Net profits for the first nine months tripled to KRW 8.6trn and revenues were substantially higher at KRW 15trn. Net profits for the third quarter were 13% higher than in the same period last year. Revenues were KRW 5.1trn, up 27% from KRW 4trn a year earlier.

The deteriorating market has led some observers to speculate that HMM could be in the red as early as 2024. Japanese investment bank Nomura last month predicted that the owner will probably start posting operating losses from the second half of next year. It cited the drop in freight rates, which affects HMM and its alliance partners Hapag-Lloyd, Ocean Network Express and Yang Ming Marine Transport.

HMM, founded in 1976 as a subsidiary of Hyundai Heavy Industries, was taken over by Korea Development Bank in 2016 as part of the government’s shipping industry restructuring. Ranked the eighth-largest liner operator in the world, HMM deploys 76 ships totaling 816,000 teu, of which 44 ships of 608,000 teu are owned.