Despite myriad doom and gloom headlines based on rapidly declining spot rates, an influential container expert is forecasting liner shipping will post a full-year net profit of $223.4bn, a 50.6% improvement over the record profits made last year. John McCown, who runs Blue Alpha Capital in the US, has issued his latest liner quarterly profits report, which show that while Q2 marked an earnings peak for container shipping, Q3 remained strong thanks to the large portion of boxes that move on contract, not on spot. McCown estimates the number of containers shipped via the spot market is no more than 20%, and while spot prices have been falling all year, long term rates remain strong.

“Much is now already baked in for 2022 financial results. I suspect the folks who focus on spot rates and have been predicting a near term earnings collapse will be surprised by the actual third quarter results. They will likely be even more surprised by fourth quarter results as they haven’t been focusing on the more relevant aggregate pricing metrics. As such, they are substituting narrative for analysis, as no earnings collapse is eminent,” argued McCown, a liner veteran whose career started out with Malcom McLean, the American who created the seaborne container trades in the 1950s.

McCown estimates liners made a combined net profit of $58.9bn in Q3, a 22.4% improvement over the same period a year ago. Compared sequentially to Q2, net income was $4.1bn or 6.6% lower. “The 2Q22 actual results can now be recognized as the peak in terms of earnings. There will be further declines from 3Q22 in quarters to come,” the new container report suggests.

Once again, McCown showed how the industry’s profits beat those at FANG, the acronym for Facebook, Amazon, Netflix and Google, favorites of the capital markets owing to their fast-growing profits. Container shipping industry profits were 14% higher than total FANG profits in Q4 last year, 103% higher than FANG profits in Q1 this year and 145% higher than FANG profits in Q2. For Q3, that gap has expanded even more as container shipping industry profits have swelled to being 158% above total FANG profits.

The container shipping industry net income to revenue margin of 43.9% in Q3 was 4.2 times the overall FANG margin. Compared to earnings behemoths Apple and Microsoft combined, total container shipping industry profits were 54% higher with a profit margin that was 1.6 times the combined Apple and Microsoft margin.

Data from Container Trades Statistics (CTS) shows that worldwide container volume was down 3.9% in the third quarter compared to the same quarter last year, extending a downtrend from the 1.6% decline in the second quarter, 0.9% decline in the first quarter and the 0.2% volume gain in the fourth quarter.