Maritime carriers closed 2021 with 190,000 million dollars in profits

A rough sea, fishermen profit. A recent report by the maritime research consultancy Drewry It reveals that, in 2021, ocean carriers generated about $190 billion in annual profit and about $130 billion, earned mostly by charging higher prices.

According to the report, the latest quarterly results announced by the major container carriers highlight the reversal of fortunes in an industry that has gone from being a financial laggard to “one of the most lucrative business sectors in the global economy.”

Drewry’s analysis, collected by the Offshore Energy portal, reinforces the opinion that the high profits of ocean carriers are the result of higher freight rates, and not of a higher volume of business, additional services or lower costs. For example, neither Maersk nor Hapag-Lloyd transported more containers in the last quarter than in the same quarter of 2020.

“The ocean carrier ‘money machine’ is now working at an exceptional level,” he says.

Drewry estimates that the ocean carrier sector produced EBIT profit of about $190 billion in 2021, of which an estimated $56 billion was generated in the fourth quarter of 2021 alone.

Maersk alone reported operating cash flow of $22 billion (before capex) and free cash flow of $16 billion (after capex) in the full year of 2021.

If other carriers had the same level of cash flow per TEU, this would mean that the global ocean carrier industry is producing a total free cash flow of about $130 billion per year.

More containers: round investment

According to the report, most major carriers are investing in additional vessel capacity for the future. Shipyards have ordered more than 600 container ships, totaling more than 5 million TEUs of capacity.

Thus, maritime carriers invested some 20,000 million dollars in new ships and some 10,000 million in new containers in 2021. However, this represents less than a quarter of the extra money generated. Some of the ship investments are in dual-fuel ships capable of running on carbon-neutral methanol.

Maersk, CMA CGM and MSC are also acquiring companies to offer air cargo transportation or to add end-to-end transportation capabilities to their customers. On the other hand, ZIM, ONE and others are upgrading their computing capabilities.

However, shippers, who underwrite the estimated $130 billion annually that is passed on to ocean carriers, expect carriers to reinvest some of this money in improving their long-term service, according to Drewry.

And the bad service?

According to Drewry, the “poor quality of service” provided to shippers is partly under the control of carriers and partly caused by port congestion and inland bottlenecks.

For example, many clients of the consulting firm complain about relationships with most of their carriers, as they are worse than before the pandemic. In addition, cargo visibility remains patchy and carriers fail to report service failures to shippers in a timely manner.

“In the past, carriers could justify a lack of investment in the quality of their service by pointing to a lack of money. In the next year or so, shippers will expect carriers to do something positive with the mountain of money this industry is now making,” he said.