A new report by a British shipping consultant, Drewry, has revealed that container shipping would record more profits in 2021 better than 2020 with 2022 also tipped to be highly profitable.
“The container shipping market has never been so hot,” the new report from Drewry states.
The Full-year 2020 figures for all liners show their industry notched up a collective $26.6bn operating profit, the highest figure ever recorded by the UK analysts, with a combined operating margin of 13%.
Drewry’s working position is that port congestion and container equipment shortages will remain a feature throughout most of 2021, albeit lessening in degree as the months pass. This will further restrict the availability of capacity and lead to substantially higher average spot and contract freight rates.
Liners are widely expected to report stunning results for Q1. For example, Cosco Shipping, the world’s third-largest liner, said last week it expected this year’s first-quarter net profit to total RMB15.41bn ($2.3bn), hugely up from the $44m for the first three months of 2020.
“With higher contracts rates locked in, another highly profitable year is virtually guaranteed and Drewry thinks the industry will re-set profitability records once again in 2021, despite several OPEX headwinds in the form of higher fuel cost and charter rates,” Drewry predicted.
For 2022, Drewry sees some erosion in freight rates as carriers will lose the inflationary impact caused by the current supply chain disruption, but nevertheless, the consultancy believes that lines will manage to stay highly profitable thanks to favourable supply and demand growth trends, alongside skillful capacity management making for what Drewry described as a “prolonged and unprecedented upcycle”.
A recent shipping report from investment bank Jefferies predicted container freight rates and charter rates will remain “elevated” this year.
Clarkson Research Services is equally optimistic when looking at 2021’s projected container supply/demand picture in a report published on Friday.
“Near-term containership market outlook remains positive, with support from firm box trade volumes (projected increase of 5.7% across 2021) and continued regional port congestion and logistical disruption (including from the recent Suez Canal blockage), against a backdrop of ‘manageable’ supply growth (4.0% in 2021),” Clarksons predicted.