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Supply chain turmoil to boost carrier profits, says Drewry

Drewry predicts profit surge
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Maritime consultant Drewry has anticipated that the period of supply chain disruption, brought on by the pandemic, will last longer than initially anticipated.

This in turn will force big increases to container freights and carrier profit forecasts, as published in its latest Container Forecast Report.

Drewry now expects world port handling to increase by 8.2% for 2021, or 7.2% against pre-pandemic 2019. Operations are not expected to normalise from the pandemic until the end of 2022.

Port handling for 2022 is still expected to increase by 5.2%, although rising inflationary pressures could possibly lower this amount.

Fleet growth will lag behind demand growth in 2021 and 2022. However, 2023 is set to change this as the recent frenzy of orders start to be delivered.

© Drewry Maritime Research Container Forecaster

There has been a record carrier industry EBIT, as Drewry estimates, topped $39.2 billion in Q2 of 2021, almost an eleven-fold surge compared to the same quarter in 2020. This demonstrates the little impact that increased input costs such as charter rates and bunker prices have had.

The speed at which the supply chain is to recover will have a significant impact on the forecast. Drewry revealed that the reasons behind a much longer recovery than initially expected can be explained below:

  • We had expected more progress at this stage. The deteriorating situation makes us think the problem is much deeper-seated than feared, with the pandemic bringing forward latent crises within certain sectors.
  • The consensus view from conversations with industry professionals is that end-2022 is a more likely timeframe, superseding previous expectations of a post-Chinese New Year fix.
  • Rising Delta cases have raised the risk for further logistics capacity to be restricted, either through more lockdown measures or stricter working protocols.
  • US West Coast dockworker contract expiration next summer looms as a disruptive risk.

Drewry also predicted earlier this year that the surging cargo demand in the wake of the pandemic would result in increased terminal capacity. However, this increased capacity may still not be enough to meet these forecasted demand levels.

This comes as it was forecasted in July 2021 that global container port capacity is projected to increase by an average of 2.5% per year while global demand is set to rise by an average of 5% per annum over the same period.

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