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Drewry: Moderating Growth Will Still Give Lines $200B Profit for 2022

profit forecast for container lines
Drewry forecasrts revenues will reach $500 billino for the first time in 2022 (file photo)

Published Jan 25, 2022 4:57 PM by The Maritime Executive

The world’s container carriers smashed records in 2021 leading to reports of dramatic profit increases and while the growth is expected to moderate in the year ahead, the companies are still forecast to show another year of record results. Maritime research consults Drewry released its outlook for 2022 forecasting that higher carrier profits would drive industry sales past $500 billion for the first time in 2022 prompting Drewry to revise its earnings estimate to a staggering $200 billion for the full year.

“The gravy train kept on rolling for ocean carriers,” writes Drewry in its latest Container Forecaster report noting that the industry “once again exceeded our expectations,” with its third quarter 2021 reports. Drewry estimates EBIT performance at $70.9 billion for the third quarter, “a staggering nine-fold improvement from $7.6 billion in the same quarter a year ago.”

Given that the industry was ahead of where they expected after nine months, Drewry had again upgraded its annual forecast for 2021 to $190 billion from its previous projection of $150 billion in profits. They expect that the container carriers will show a profit margin of approximately 43 percent for the full year.

“The pandemic and ensuing supply chain crisis is the primary driver of the supercharged carrier profits and share price bonanza,” says Simon Heaney, Senior Manager, Container Research at Drewry. “In simple terms, the longer the congestion lasts, the longer that freight rates and carrier profits will stay extremely high.”

Among the factors they foresee for 2022 is a reduction in volatility in the spot market instead expecting that the trend will continue to longer-term contracts although they forecast they will be signed at much higher rates. 

“On balance, Drewry thinks the bulk of risk from the highly unpredictable container market will reside with shippers in 2022,” says Heaney while forecasting that 2022 will be another year of severe disruption, under-supply, and extreme cost.

Drewry notes that its forecast that it would take all of 2022 to fix the supply chain already factored in some further Covid-related disturbance. They believe that the emergence of Omicron added greater uncertainty to the market. On the balance, they however believe that container demand growth is losing some momentum and that carriers will face further headwinds in the year ahead creating the expectation for moderating growth.