Shipping firms to haul in record profits on back of supply chaos

SHIPPING companies are forecasting record profits this year as they capitalise on soaring demand for deliveries across the world.

Profits for firms shipping containers are expected to total $150bn (£110bn) in 2021, five times higher than the previous annual record, according to forecasts by consultancy Drewry.

The cost of sending a container from Asia to Europe has risen around 800pc over the past year to more than $10,000 amid chaos at ports caused by numer- ous lockdowns, extreme weather and the blockage of the Suez Canal in March.

Some companies desperate to nail down shipping costs have agreed longterm contracts to avoid the risk of even higher prices, which is expected to boost profits for shipping companies further next year, according to Drewry.

Simon Heaney, senior manager of container research at Drewry, said: “To seasoned observers of the container market, typing these numbers on a page is frankly surreal.” The number of new ships entering the market is expected to

lag behind demand for freight until 2023, according to Drewry.

But the consultancy said fleet growth is expected to outstrip demand from 2023 as the recent frenzy of orders start to be delivered. The anticipated mismatch between supply and demand in 2023 presents a risk to carriers of overcapacity returning to the market, Drewry said. The findings are likely to fuel criticism that shipping lines have been profiteering from the recent supply chain chaos.

Over the summer, President Joe Biden ordered the US Federal Maritime Commission to crack down on “unjust and unreasonable” shipping fees.

China’s regulators have also pressured shippers to reduce costs as Beijing offered support to the country’s hard-pressed manufacturing sector.

Mr Heaney said: “With regulators breathing down their necks for evidence of unethical activity, lines are on the defensive and recent moves by some to cease further spot rate increases need to be viewed through the prism of a PR war.

“While that might seem cynical, in our view shipping lines are not to blame for this crisis. They are just the very lucky winners from this cruel lottery.”