Carriers are continuing to enjoy rapidly growing profits and will do so until at least the end of 2021, with shipping experts anticipating global profits to surpass $100 billion for the year.
In its latest Container Forecaster, Drewry Shipping Consultants (Drewry) predicted freight rates will increase by 50% on average “against a backdrop of huge operational disruptions to the port and ship systems”.
The major carriers and alliances have consistently made substantial profits since the outbreak of the COVID-19 pandemic, driven by rising consumer demand, especially in North America, and freight rates.
Container flows tell the story
Data behind the soaring consumer demand was outlined by the monthly Global Port Tracker report released by the National Retail Federation (NRF) and Hackett Associates, tracking overall throughput of the United States’ container ports.
US ports covered by Global Port Tracker handled 2.33 million TEU in May 2021, up 8.6% from April and up 52.2% year-on-year (YoY).
The number set a new record for the most containers imported during a single month since NRF began tracking imports in 2002, topping the previous record of 2.27 million TEU set in March 2021.
Additionally, 2021 is on track to grow 16.7% over 2020’s full-year total of 22 million TEU. Cargo imports during 2020 were up 1.9% over 2019 despite the pandemic.
The Port of Long Beach, one of the US’s largest ports, moved 724,297 TEU in June 2021 – up a fifth from the June 2020.
Second quarter throughput was 2,377,700 TEU, up 35.8% from 2020, marking the second-best quarter in the Port’s 110-year history.
The increased reliance on ports and its surrounding supply network will be supported by significant funding announced by the US Department of Transportation (USDOT).
The Port of Dubuque and Northeast Georgia Inland Port are among the infrastructure projects chosen by USDOT to receive approximately $905.25 million, in addition to the Southport Berth Development at PhilaPort.
In a statement, the USDOT said the INFRA grants were selected as part of an effort to improve the US supply chain and logistics.
The ripple effects of the worldwide cargo boom could also pave the way for UK ports to improve efficiencies and remove bottlenecks in inland logistics through a more regionalised business model.
Ports in the UK could see an increase in regional e-fulfilment centres – which provide an all-encompassing service for importers on receiving stock from manufacturers and forwarding goods onto customers – to disperse to the region, one director from Peel Ports argued.
“I do see that where port-centric logistics can be established there will be an increasing trend for those types of warehousing – and I do see in time as the market matures, the increase of regional ports for regional markets,” Stephen Carr, Group Commercial Director at Peel Ports, said.
Is regulation on the horizon?
Staggering profits for shippers could be stunted past 2021, following a new executive order signed by the Biden administration to crack down on anticompetitive behaviour in rail and ocean shipping industries.
White House Press Secretary Jen Psaki on 8 July said that the President will instruct the Federal Maritime Commission (FMC) to wrangle “unjust and unreasonable” fees and work with the Justice Department to investigate and punish anticompetitive conduct.
Psaki noted that three foreign-owned shipping alliances control more than 80% of the global market, contributing to a spike in shipping costs and fees during an e-commerce boom from the global pandemic.
“A lot of American companies rely on railroads to ship their goods domestically and ocean carriers to ship their goods internationally. Both of these industries have grown more concentrated over time,” Psaki said.
“This executive order takes several steps to address these problems.”