The world’s largest shipping lines reach the peak of their most profitable race in history. Now they are starting to decide how they will invest the billions of dollars they are making each quarter.
Supply chain chaos, caused by pandemic disruptions to ports, factories and consumer spending, has allowed shipping companies to charge their customers 20 times more per container than before the pandemic. But their underlying expenses haven’t changed much, allowing freight carriers to keep nearly all of the price increase as a profit.
Before the pandemic, shipping was a cutthroat, low-margin business in which carriers competed fiercely to lower prices and attract customers. Most businesses have oscillated between losing money and making a small profit each quarter. In about two years, analysts expect shipping rates to return to normal levels and shipping companies to return to low profits and shrinking budgets.
Before that happened, many shipping companies decided to use their pandemic profits to expand into potentially more lucrative new lines of business, like cruise ships and cargo planes. Others are just trying to get as big as possible with their new money to gain an edge over the competition.
Maersk buys part of each step of the supply chain
The world’s largest shipping company is no longer content to be just a shipping company: Maersk aims to control every step of the logistics of the supply chain, from ships to planes to trucks to warehouses. This year, the company purchased:
Mediterranean Shipping Company expands its cruise line
Private family business doesn’t report quarterly profits, but has had a shopping spree that may help overtake Maersk as the world’s largest shipping company. Last year she bought:
CMA CGM launches an airline
In February, the world’s third-largest shipping company launched an airline to carve out a slice of the air freight industry, which has also seen rates and profits skyrocket during the pandemic. This month alone, he bought:
Hapag-Lloyd acquires port terminals
Hapag-Lloyd has decided to use its pandemic windfall to buy back port terminals, many of which were overwhelmed by freight traffic during the pandemic. Company CEO Rolf Habben Jansen said the company was not interested in air freight, freight forwarding or warehousing like some of his rivals-but it’s always open to the purchase of another terminal. Since the start of the pandemic, he has bought:
Evergreen doubles the size of its freight fleet
Evergreen, the seventh largest shipping company in the world, is looking to move up the rankings. The company has embarked on the biggest ship buying frenzy for its size of all shipping companies; when his orders are filled, he will have practically doubled the size of its freight fleet (and edged out Hapag-Lloyd to become the fifth largest shipping company in the world). This year he bought: