OCEAN CARRIERS PROFITS APPROACH $100 BILLION IN 2021
Drewry has released its latest Container Forecaster report which finds that 2021 will be the first year in the history of container shipping when carrier profits approach $100 billion and average freight rates jump by 50%, against a background of huge operational disruptions to the port and ship systems.
The current rate level corresponds to an uplift of 30 percent on Drewry's analysis from March. This record-high profit period for ocean carriers is expected to continue into 2022, albeit at a lower level than this year. Drewry anticipates rising costs and falling rates, which will put a dent on around a third of the industry's EBIT. Furthermore, Drewry expects consumption to change once the COVID-19 pandemic fades, as consumers will increasingly purchase services at the expense of goods.
Drewry expects that volumes will continue to rise through the Q3 2021 peak season and to end the year with annual growth of approximately 10%. There will still be growth next year, but probably only about half as strong as consumer spending is expected to move back towards services as COVID-related restrictions are lifted, the analyst added. On the freight rates, they are still reaching new highs as spot rates continued to surge and contract pricing followed suit, with average freight rates expected to rise by around 50% in 2021. Nevertheless, the analyst sees no immediate solution to the structural problems that have caused sky-high freight rates and widespread delays in the container industry. Capacity is too low for operators and major ports alike, and the Suez Canal blockage and the COVID-19 outbreaks at the Yantian port in China show that the industry infrastructure is ill-equipped for the current growth.
Drewry furthermore come out with a warning to carriers on their public relations: ‘With increasing attention on shipping’s environmental footprint and tax contributions, lines are in danger of being cast as profiteering villains, unsympathetic to the needs of their customers. We hope they will be good global citizens and do more to help improve the efficiency of the supply chain.’