Liner shipping profits tipped to surpass $200bn this year

Analysts are increasingly confident that liners will smash 2021’s record earnings this year.

Consultantcy Drewry is predicting container shipping will notch up a combined EBIT of $200bn this year, up from its revised 2021 total of $190bn.

“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,” Simon Heaney, senior manager of container research for Drewry, wrote in the company’s latest Container Forecaster report.

Annual contract freight rates this year will be going up by more than 60% on the major routes, when compared with 2021 contract rates, Drewry estimates, allowing for greater profits even as volumes fall.

“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,” Drewry suggested.

Analysts at HSBC, meanwhile, reckon liner shopping will make a $163bn operating profit this year, up 8% year-on-year.

“This is mainly driven by strong tailwinds in contract rates fuelled by a 77% increase in spot rates (SCFI) in the past 12 months. Shippers and liners are entering into contract negotiations earlier than before. Head-haul (Asia-US, Asia-Europe) long-term rates look set to double or triple from those set last January, according to Xeneta, an analytics platform,” a report published by HSBC today stated.

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Mr Sam Chambers