Sunday, February 5, 2023
spot_img
HomeAnalysisDrewry: More muted growth, but higher carrier profits forecast in 2022

Subscribe

To our FREE newsletter
Get all the latest maritime news delivered straight to your inbox.

Drewry: More muted growth, but higher carrier profits forecast in 2022

Container demand growth is losing some momentum amid mounting headwinds, but carriers will continue to rake huge profits, according to Drewry’s latest Container Forecaster report.

Fast rising inflation, ongoing supply chain bottlenecks and the Omicron Covid-19 variant are conspiring to slow the pace of growth in container handling, forcing Drewry to lower its outlook for world port throughput in 2022 to 4.6% in the latest Container Forecaster, from 5.2% in the previous edition.

The full-year 2021 estimate was also downgraded to 6.5%, from 8.2%.

However, Drewry forecasts that ocean carriers will ride a third year of 15%+ annual growth in total revenue in 2022, with global carrier industry sales expected to exceed $500 billion next year for the first time.

The gravy train kept on rolling for ocean carriers in 3Q21 as the industry once again exceeded our expectations, posting an estimated EBIT performance of $70.9 billion, a staggering nine-fold improvement from $7.6bn in the same quarter a year ago.

Given that the industry was ahead of where we expected after nine months (estimated EBIT of $136.5 billion), Drewry once again upgraded its annual forecast for 2021 from the previous guidance of $150bn to $190bn, at a margin of approximately 43%.

We think that 3Q21 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. Our revised estimate for this year now stands at $200 billion (margin 37%).

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.

Carriers are building significant free cash flow that will give them ample room to allocate future income to dividends, pay down debt, and pursue growth opportunities.

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’s previous position that it would take all of 2022 to fix the supply chain already included some space for further Covid-related disturbance, but even though the emergence of Omicron hasn’t caused us to extend the projected recovery timeline, it has added greater uncertainty to proceedings.

Our view
On balance, Drewry thinks the bulk of risk from the highly unpredictable container market will reside with shippers in 2022, which is shaping up to be another year of severe disruption, under-supply and extreme cost.

Source: Drewry

Related Posts

Video

Finance & Economy
Shipping News
Ports

Keppel Corp posts 9% drop in full-year profit

Singapore’s Keppel Corp said on Thursday its net profit for the year fell 9%, partly hurt by weak performance from its urban development business...

Stolt-Nielsen sees Q4 profits rise on strong markets

Stolt-Nielsen Limited reported unaudited results for the fourth quarter and full year 2022. The Company reported a fourth-quarter net profit of $95.3 million, with revenue...

Euronav delivers better-than-expected Q4 revenue

Euronav NV reported its non-audited financial results for the fourth quarter ended 31 December 2022. Hugo De Stoop, CEO of Euronav said: “Constrained vessel supply...

Wartsila: A challenging year with strong annual growth

HIGHLIGHTS FROM OCTOBER–DECEMBER 2022 Order intake decreased by 24% to EUR 1,638 million (2,150)Service order intake increased by 6% to EUR 791 million (747)Net sales...

Hapag-Lloyd achieves extraordinarily strong result in its anniversary year 2022

On the basis of preliminary and unaudited figures, Hapag-Lloyd has concluded the 2022 financial year – in which it celebrated its 175th anniversary –...

Baltic index hits over 2-year trough on waning demand for larger vessels

The Baltic Exchange’s dry bulk sea freight index dropped to its lowest level in...

Luxury Cruise Market Holds Much Promise For Greek & East Med Hidden Gem Destinations

The appeal of Greece and the East Mediterranean as an ideal region for luxury...

Baltic index falls to over 2-year low as larger vessel rates slide

The Baltic Exchange’s dry bulk sea freight index fell to its lowest since June...

Baltic index logs worst month in 3 years

The Baltic Exchange’s main sea freight index registered its biggest monthly percentage fall in...

Baltic index snaps 9-day losing streak as panamax, supramax rates rise

The Baltic Exchange’s main sea freight index snapped its nine-session losing streak on Tuesday,...

DP World wins bid for development of a mega-container terminal at India’s Deendayal Port

DP World has won a major concession to develop, operate and maintain the mega-container terminal at Deendayal port in Gujarat, on the western coast...

Luxury Cruise Market Holds Much Promise For Greek & East Med Hidden Gem Destinations

The appeal of Greece and the East Mediterranean as an ideal region for luxury cruising will be one of the main highlights of the...

Port of Los Angeles proposes cruise terminal project

The Port of Los Angeles is inviting comments on a draft Request for Proposals (RFP) for the future development of a new Outer Harbor...

Port of Long Beach Closes 2022 with Second-Busiest Year

The Port of Long Beach marked its second-busiest year on record by moving 9.13 million twenty-foot equivalent units in 2022, allowing for a return...

Hapag-Lloyd AG acquires share in J M Baxi Ports & Logistics Limited

Hapag-Lloyd AG signed a binding agreement today under which it will acquire 35% of J M Baxi Ports & Logistics Limited (JMBPL) from a...