Container Shipping Market Breaking Records

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British shipping consultants Drewry are predicting container shipping will smash last year’s record profits in 2021, with 2022 also tipped to be highly profitable, reports splash247.

Figures for all Liners

“The container shipping market has never been so hot,” the new report from Drewry states.

Full year 2020 figures for all liners – as tallied by Drewry – show the 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%.

Higher Average Spot

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.

Highly Profitable Year

“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 skilful capacity management making for what Drewry described as a “prolonged and unprecedented upcycle”.

Container Freight Rates

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.

Outlook Remains Positive

“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.

In a weekly container briefing published today, brokers Braemar ACM noted: “The consensus amongst analysts is that this market is set to continue into 2022 and it is apparent that the liner companies are also backing these freight rates to continue for quite some time.”

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Source: Splash247