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Container lines set for $200bn profit in 2022: Drewry

Photo: Rahita Elias CMA CGM vessel in Singapore port
A fully laden 23,000 teu CMA CGM containership at berth in Singapore
Although demand growth is slowing Drewry has upgraded its expected profits for container lines in 2021 to $190bn, and even higher in 2022.

Container shipping profitability is continuing to climb to new stratospheric highs and Drewry noted in its latest Container Forecaster report that in Q3 2021 the sector’s EBIT was $70.9bn, “a staggering nine-fold improvement” over the previous year.

With the Q3 number bringing profitability for the first nine months of 2021 for the sector to an EBIT of $136.5bn Drewry has upped its forecast for the year as whole to $190bn from $150bn previously.

Looking into 2022 Drewry said combination of rising inflation, ongoing supply chain bottlenecks, and the Omicron Covid-19 variant are conspiring to slow the pace of growth in container handling onshore, and as a result forecast port throughput growth for 2022 had been cut to 4.6% from 5.2% previously.

“We think that 3Q21 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,” commented Simon Heaney, Senior Manager of Container Research for Drewry.

Drewry’s EBIT estimate for container shipping in 2022 is $200bn, some $10bn 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 said.

Drewry noted that lines would have ample free cash to pay down debts, make dividends to shareholders, and pursue growth opportunities. Last year saw lines ordering a record 548 ships of 4.2m teu in capacity according to Clarkson Research, as Seatrade Maritime News reported yesterday.

Lines have also been splashing out billions 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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