Reliable carriers are more profitable

Statistical analysis of deep-sea carriers’ global reliability as well as their profitability shows that schedule reliability does positively impact financial results.



That’s according to research by SeaIntel which tested the hypothesis of whether the relative profitability of a carrier was independent of their reliability relative to their competitors. “To do this we calculated the correlation coefficient between relative profitability and reliability across 14 quarters for all of the major carriers that publish their financial results on a quarterly basis.



“If the baseline hypothesis stands true ie, there is no correlation between profitability and reliability, then we would see an equal number of quarters, 7, where the correlation coefficient is positive and negative.



“From a statistical perspective, what we can see from the data in the period Q1 2014-Q1 to 2017-Q2 is that with 94.3% confidence we can reject the hypothesis that there is no link between profitability and reliability. Furthermore, that the rejection is biased towards a positive correlation coefficient.



“In less statistical terms,” says SeaIntel CEO, Alan Murphy, “this means that we can conclude that carriers that are more reliable than their competitors are also more profitable than their competitors. What the data does not show is precisely where the added profitability stems from.”



The reasons could be from a commercial upside related to higher rate levels or more loyal customers. “But it could also stem from lower operational costs as more reliable services lead to less exception handling.”