08 October 2021

DISRUPTIONS TO CONTINUE IN 2022 NOTES DREWRY

The maritime supply chain disruptions will not normalise before the end of 2022, according to the latest Container Forecaster report published by Drewry on 5 October.  The supply chain crisis has worsened during Q2 2021, with cases of COVID-19 temporarily closing some Chinese terminals, and extreme weather events occurring in some regions.  Drewry expects that fleet growth will continue to lag behind demand growth this and next year, but the discrepancy will be eased from 2023 onwards when the orders for newbuilt vessels will come to the market.

Stronger than expected spot rate movement in Q3 2021 and a longer supply chain recovery timeline forced Drewry to upgrade the outlook for average global freight rates (spot and contract) for 2021 to 126%, which is an upward adjustment from 47% in its June forecast. For 2022, spot rates are expected to decline, but there will be a significant increase in contract pricing, leading to an increase in average global pricing of about 6%.  One of the consequences of peaking freight rates is a record carrier industry EBIT, which Drewry estimates topped $39.2 billion in Q2 2021, an almost eleven-fold improvement from $3.6bn profit in the same quarter a year ago.  Carriers are now expected to make a record EBIT of $150 billion in 2021, and slightly more again in 2022.

Drewry warns carriers that the more profits they make, the more they will have to justify their role: “While they are unlikely to convince many shippers of their intentions, carriers have to at least demonstrate to regulators that they are doing everything in their power to improve the flow of goods, now and in the future, or potentially face unwanted operational measures being imposed. With regulators breathing down their necks for evidence of unethical activity, lines are on the defensive and recent moves by some liners to cease further spot rate increases need to be viewed through the prism of a PR war,” Drewry added.

Source: Drewry