Drewry: Container lines to see a rise in profit up to $200 bn in 2022

Drewry has revised its expected profits for container lines in 2021 to $190 bn, up from the previous $150 bn and even higher in 2022 despite a consistent fall in demand.

In its latest ‘container forecaster report, Drewry reported ‘a staggering nine-fold improvement’ in the container profitability with the sector’s Q3 2021 EBIT found to be $70.9 bn, much higher than the previous year, reaching new horizons.
Drewry revised its forecast for the year from the previous $150bn to $190 bn, considering the profitability brought by Q3 number in the first nine months of 2021, which has reported an EBIT of $136.5 bn.

For 2022, Drewry forecasted the growth rate to fall from previously expected 5.2% to 4.6% due to rising inflation, ongoing supply chain bottlenecks and the omicron covid-19 variant, all resulting in a decline in the growth of container handling onshore.
“We think that Q3 2021 probably represents the peak quarterly earnings for carriers, but that quarterly results in 2022 will stay on a more even keel that will average out slightly higher,” said Simon Heaney, senior manager of container research for Drewry.

For 2022, Drewry has estimated an EBIT of $200 bn, around $10 bn higher than 2021, with a margin of 37%.
Heaney further added, “the smoother earnings forecast rationale stems from a pivot away from the volatile (and like retreating) spot market towards longer-term contacts that are expected to be signed at much higher levels in upcoming negotiations.”

Last year lines have been seen to order 548 ships of 4.2m teu in capacity, according to Clarkson Research, and investing billions on acquiring logistics and supply chain space. For this year, Drewry asserted that lines would have the required free cash to pay the debts, make dividends to shareholders and pursue and focus upon the growth opportunities in the market.
“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.”

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