Drewry, an independent maritime research consultancy has recently revised its projections of profits by container lines to a massive high of US$150 billion for 2021, which is being described as an ‘eye-watering’ figure.
“Stronger than expected spot rate movement in 3Q21 and a longer supply chain recovery timeline are behind our reason to upgrade the outlook,” explained Drewry, which, earlier in July, forecasted the combined profit for the year to reach the US$100 billion benchmark.
The new estimation is in line with upped earnings forecasts by all major shipping companies based on the extremely positive performance of the second quarter.
Drewry estimates that earnings before interest and tax (EBIT) for container lines in Q2 reached US$39.2 billion, witnessing an 11-fold increase in comparison to figures of the same quarter last year. At the same time, many shipping companies witnessed EBIT sum surpassing expectations in an unprecedented manner.
All carriers observed an increase, some even by 50% in earnings compared to the previous quarter, due to surged freight rates, according to Drewry’s report, which also showed upward adjustments in the outlook for global freight rates to 126% from 47% predicted in June.
The report also suggested a consistent streak of high profits for shipping companies in 2022, even though there might be a modest decrease in freight rates towards the end of the year. The ground of estimations sighted included no relief in container shortage till 2023 owing to lag in supply against extremely high demand, but it also estimated port handling to increase by 8.2% this year and 5.2% in 2022.
On the other hand, Drewry forecasted that there will be little to no impact of the expected decline in spot rates, like a 0.2% decrease last week because of expectations of a significant increase in contract pricing, which will cause a 6% increase in average global pricing in 2022.
This concludes that the chaos in container shipping is proving to be worth a fortune for shipping companies.