Liner shipping on track to shatter last year’s record profits

Liner shipping is poised to blow last year’s record profits by 73%, citing soaring contract rates won by carriers in 2022, according to new forecasts from Blue Alpha Capital, led by John McCown. and persistent port congestion problems.

Net income this year will likely reach $256 billion based on the 11 carriers monitored by Blue Alpha Capital, a figure Bloomberg pointed out is roughly equivalent to Portugal’s Gross Domestic Product. Last year, liner shipping made a record profit of $148 billion, according to McCown.

McCown raised its outlook by $36 billion from an earlier April forecast after reporting a string of better-than-expected second-quarter results, the latest of which was South Korea’s HMM today.

HMM revealed a record net profit of $4.62 billion for the first half of 2022, up 1,560% from the same period last year.

11 carriers will achieve a combined net income equivalent to Portugal’s GDP this year

“The global supply chain is expected to remain tight in the months ahead. Port congestions at major locations are still pervasive,” HMM said in a statement.

British consultancy Drewry, meanwhile, is also forecasting record earnings this year, totaling a remarkable $270 billion, equivalent to Finland’s GDP. Drewry then sees a dramatic drop in profits next year, nearly halving to $150 billion (see chart below).

Maersk, the world’s second-largest container line, revealed earlier this month that it expects to post record full-year profit of $31 billion, while in Germany, Hapag- Lloyd is raking in so much money right now that he’s about to review Volkswagen as the most profitable company in the country.

A recent container shipping outlook report from HSBC suggested higher contract freight rates and continued traffic jams would help cushion weaker spot freight rates in the second half of this year.

“The normalization of demand and the resolution of congestion could proceed more slowly than expected, which has advantages for the profitability of container transport in 2H22. Going forward, we argue that after years of consolidating and forming mega shipping alliances, shipping companies have learned the discipline of capacity and while there may still be volatility in freight rates, the level the lowest freight rates seen over the past decade may not persist in the future,” predicts the HSBC report.

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Under current market conditions, Judah Levine, head of research at online platform Freightos, said today that most of the peak sea freight season has been brought forward to the spring of this year.

“Combined with some lower demand due to inflation and changing consumer spending, it also looks like the shift to normalization has begun, but it will be gradual as demand remains strong and congestion continues to escalate. strain the ability,” Levine said.

Source: Drewry Marine Research