Twelve large container carriers reported financial results for the first quarter of 2016 recently, and of those only four posted positive operating margins. And those positive margins were rather modest, ranging between 0.1 percent and 1.5 percent.

The other eight carriers all reported negative margins, signaling deteriorating operating conditions for ocean container carriers.

According to a recent report from Alphaliner, a maritime transportation information service, average operating margins of the 12 carriers fell to –5.2 percent in the first three months of this year, as compared to +5.1 percent during the same period last year.

“Carriers’ operating margins crumbled as freight rates slumped to record lows in the first quarter,” the report said.

Average freight rates, according to the Alphaliner analysis, dropped by 23 percent in the first quarter compared to the corresponding period of 2015. The fall in carriers’ average freight rates was somewhat less egregious than the 30-percent drop in the quarter’s China Containerized Freight Index (CCFI), a benchmark which tracks only headhaul export rates out of China, due to relatively more stable

backhaul rates.

The soft rates were compounded by anemic volume growth; total container volumes grew by only 1.6 percent in the first three months of the year, based on Alphaliner estimates. Maersk, the world’s largest ocean container carrier, posted the highest volume gains with a year-on-year increase of 7.0 percent to 4.72 million TEU in the first quarter of this year. Still, the carrier giant’s freight rates declined by 26 percent to $929 per TEU, compared to $1,247 per TEU a year ago.

Alphaliner concluded that it was Maersk’s decision to pursue market share that contributed to the decline in freight rates of early 2016. “In the year’s first quarter, when most competitors were trying

to curb capacity growth, Maersk deployed off-schedule extra loaders on both the Asia – Europe and Transpacific routes,” the report concluded.