Drewry: Ocean Carriers On Track to Earn $150B in 2021
Shipping consultancy Drewry has repeatedly upped its estimates for total ocean carrier earnings this year, and its latest number is staggering. Record-setting congestion and consumer demand have driven freight rates ever higher, and profits have followed suit: Drewry says that it now predicts that the liner industry will pull in $150 billion in EBIT over the course of 2021. For comparison, this is more than four times the GDP of Estonia.
The forecast reflects the astonishing arc of container rates over the course of the year. Drewry's estimates have risen fourfold since January, when it predicted that the world's ocean carriers would earn a combined $35 billion over the span of the year. Spot rates on the consultancy's benchmark World Container Index skyrocketed from $4,000 per FEU in late 2020 to more than $10,000 per FEU in early October. With regulators beginning to scrutinize pricing and booking policies, some lines are declaring that profits are ample enough and are voluntarily halting rate increases (though surcharges may continue).
The unprecedented spot market is driving up long-term contract pricing, and Drewry predicts that this may make 2022 even better for ocean carriers. By locking in rates nearly as high as today's spot market, carriers are guaranteeing a very high baseline for earnings going into next year.
Drewry also expects that the disruption and congestion that have plagued the containerized supply chain will continue well into next year, and perhaps as late as the fourth quarter of 2022. "The deteriorating situation makes us think the problem is much deeper-seated than feared, with the pandemic bringing forward latent crisis within certain sectors," warned senior manager for container research Simon Heaney. For carriers, that means sustained support for elevated rates; for shippers, it means another year of higher prices and reduced service levels.