Search By Topic The Green Supply Chain Distribution Digest
Supply Chain Digest Logo

Category: Global Supply Chain

Global Supply Chain News: Drewey Says Container Volume Growth will Slow in 2022, but Profits will Still be Huge for Ocean Carriers

 


Conditions this Year should Continue to Strongly Favor Carriers

 

 

Jan. 25, 2022
SCDigest Editorial Staff

It was a blowout 2021 for ocean container carriers, as profits exploded along with shipping rates.

Supply Chain Digest Says...

 

Shippers can blame the pandemic and high container volumes for the soaring rates – a scenario that should continue on in 2022.

 
 

What do you say?

 
Click here to send us your comments  
   
Click here to see reader feedback  

While container volume growth is forecast to slow a bit this year, the healthy bottom lines will continue, at shippers’ expense.

That according to a recent blog post from the maritime analysts at Drewry.

“Fast rising inflation, ongoing supply chain bottlenecks and the Omicron Covid-19 variant are conspiring to slow the pace of growth in container handling,” Drewry says.

That leads Drewry to lower its forecast for global container volumes in 2022 to 4.6%, down a bit from 5.2% in the previous edition of its forecast.

The full-year 2021 estimate was also downgraded to 6.5%, a sharp drop from 8.2% earlier.

But none of that will stop container carriers from making lots of money in 2022. Drewry expects the carriers in aggregate will enjoy a third consecutive year of more than 15% annual growth in total revenue this year.

2021 was a record shattering financial year for container carriers. In Q3, the last quarter for which data is available, in total the container lines had earnings before interest and taxes (EBIT) of what Drewry estimates was $70.9 billion, an amazing nine-fold improvement from $7.6 billion in the same quarter in 2020. In 2018 and 2019, the sector had almost no profits, as seen in the chart below.

 

Drewry also expects EBIT margins at the carriers to be a very healthy 43% for the year.

The Drewry analysts also say Q3 will probably be the peak profit period for carriers in the current cycle, but that for the full year 2022 will likely exceed 2021.

“The smoother earnings forecast rationale [for 2022] 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,” Drewry says.


(See More Below)

CATEGORY SPONSOR: SOFTEON

 

 

 

 

The healthy profit environment also is allowing the container carriers to build significant free cash flow that will give them ample room to allocate future income to dividends, pay down debt, and pursue growth opportunities, Drewry notes.

Shippers can blame the pandemic and high container volumes for the soaring rates – a scenario that should continue on in 2022.

“In simple terms, the longer the congestion lasts, the longer that freight rates and carrier profits will stay extremely high,” Drewry says.

So it will be another tough year for shippers, Drewry says, in 2022, with continuing severe disruptions, under-supply conditions - and extreme shipping costs.

What are your thoughts Drewry's forecasts? Let us know your thoughts at the Feedback section below

Your Comments/Feedback

 
 

Features

Resources

Follow Us

Supply Chain Digest news is available via RSS
RSS facebook twitter youtube
bloglines my yahoo
news gator

Newsletter

Subscribe to our insightful weekly newsletter. Get immediate access to premium contents. Its's easy and free
Enter your email below to subscribe:
submit
Join the thousands of supply chain, logistics, technology and marketing professionals who rely on Supply Chain Digest for the best in insight, news, tools, opinion, education and solution.
 
Home | Subscribe | Advertise | Contact Us | Sitemap | Privacy Policy
© Supply Chain Digest 2006-2021 - All rights reserved
.