Singapore (Commonwealth Union)_One of the largest companies in the container shipping market in Singapore, Maersk, has increased its annual profit estimates for the third time this year. Subsidiary operational profit projections for the entire year were increased from US$24 billion to around US$31 billion.
According to independent maritime research firm Drewry, the sector as a whole will generate an operational profit of US$270 billion this year, more than 10 times the profit of US$26 billion in 2020. The last two years have seen growth in the business thanks to rising demand for masks and other personal protective equipment as well as consumer expenditure during the COVID-19 epidemic. The pandemic’s effects, however, seem to be wearing off, and it is anticipated that the industry will be declining from its highs.
However, for the time being, decreased shipping demand and pricing should result in cheaper expenses and fewer supply chain bottlenecks. The cost of shipping is a major factor in inflation worldwide. Although the pass-through to inflation from such rates is smaller than those linked with food or fuel expenses, prices for goods increase when freight rates rise. The cost of living is rising globally, according to Mr. George Griffiths, managing editor of Global Container Freight at S&P Global Commodity Insights.
While the Logistics and Supply Chain Management Society anticipates major downward pricing to start sooner in the first quarter of 2023, Maersk stated that a “gradual normalization” of freight prices will likely commence in the fourth quarter of next year. The container shipping sector is preparing for an oncoming downturn, but it is optimistic that the robust profits from the last two years would help lessen the blow. There are even indications that it might very well surpass the US$2,000 per TEU barrier, which was the norm before COVID, he told CNA.
