Will Shipping Lines See Another Record Year In 2022?

May 9, 2022

A recent study by transport and logistics company Kuehne + Nagel, along with new data from maritime research firm Drewry, highlights how shipping lines look increasingly likely to pocket even more cash in 2022 than in 2021.

Drewry’s baseline forecast for the industry now calls for ocean carriers, as a group, to earn $300 billion this year (measured in earnings, before interest and taxes). Last year, ocean carriers made $214 billion, meaning the firm is calling for a 40% increase from 2021 levels.

In addition to the above forecast, Drewry expects full-year average freight rates (cost of shipping an item from one location to another) to rise 39%-40% year-on-year.

Senior Manager of Container Research at Drewry, Simon Heaney, says that recent events have not fundamentally changed the firm’s outlook. “Risks are much more heavily weighted to the downside from a carrier perspective, but we still think this year is going to be characterized by extreme freight rates and carrier profitability,” Heaney explains.

Detlef Trefzger, CEO of Kuehne + Nagel, adds to Drewry’s optimistic view of the industry, stating “Consumption is still robust.” In a conference call for the research firm in April, Trefzger commented on freight rates, saying “Yes, they are slightly down. But we have to remind ourselves that they are still five times higher than pre-COVID.”

Shipping Giant Maersk Reports Q1 Earnings

A.P. Moller-Maersk, often seen as a barometer for global trade, raised its full-year guidance during the last week of April, reports Reuters, while also cautioning that the container market may normalize in the second half of 2022.

On May 4, Maersk reported earnings, explaining that COVID lockdowns in China had a limited impact on its first quarter numbers.

Revenue came in at $19.3 billion for the company, up 55% from a year earlier, driven by supply-chain disruptions. Free cash flow also increased to $6 billion in the first quarter.

A.P. Moller-Maersk is an integrated container logistics company and one of the holdings in the U.S. Global Sea to Sky Cargo ETF (NYSE: SEA).

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