Shipping Lines Set To Make $200 Billion Profit In 2022

Despite the retardation in demand growth, Drewry has boosted its expected gain for container lines in 2021 to $190 billion, and even more in 2022.

Shipping Lines Set To Make $200 Billion Profit In 2022
Representational Image | Courtesy: Port of Los Angeles

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The profitability of container shipping is soaring to new stratospheric highs. Drewry remarked in its latest Container Forecaster report that in Q3 2021 the sector’s EBIT was $70.9 billion, which is “a staggering nine-fold improvement” over the last year.

With the third-quarter numbers bringing profitability for the first three quarters of 2021 for the sector to an EBIT of $136.5 billion, Drewry has forecasted for the year as a whole to $190 billion from $150 billion previously.

As far as this year is concerned, Drewry noted that combination of rising inflation, ongoing supply chain bottlenecks, and the Omicron Covid-19 variant are resulting in slowing the pace of growth in container handling onshore, and consequently, forecast port throughput growth for 2022 had been reduced to 4.6% from 5.2% previously.

“We think that Q3 2021 probably represents the peak quarterly earnings for carriers, but that quarterly results in 2022 will stay on a more even keel that will average out slightly higher,” stated Simon Heaney, Senior Manager of Container Research for Drewry.

The EBIT estimate of Drewry for container shipping in 2022 is $200 billion, which is $10 billion higher than 2021, with a margin of 37%.

“The smoother earnings forecast rationale stems from a pivot away from the volatile (and likely retreating) spot market towards longer-term contracts that are expected to be signed at much higher levels in upcoming negotiations,” Heaney added.

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Lines have also been spending out money freely on acquisitions in the logistics and supply chain space.

“The pandemic and ensuing supply chain crisis is the primary driver of the supercharged carrier profits and share price bonanza. In simple terms, the longer the congestion lasts, the longer that freight rates and carrier profits will stay extremely high.”

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