Shipping line profits continue to rise as does political pressure to investigate the sector

This last factor has a strong disruptive potential for the maritime industry.

"Spot rate levels continue to fall, underlining that we are in fact in the transition phase back to normal," said maritime industry analyst Lars Jensen, in a comment, via his account. from LinkedIn. However, he also makes it clear that “the decline will take quite some time before normality resumes, so burden takers should not plan based on any (similar) pre-pandemic normality in the short term.” term".

The analyst notes with interest how several shipping lines have increased their profit projections for 2022, as was the case of Maersk, which raised its EBITDA prospects from US$30.000 billion to US$37.000 billion. While Jensen acknowledges that this, at first glance, seems to contradict the narrative of a declining market, he points out that the reality is that, “while spot rates are declining, contract rates for 2022 are substantially higher than those for 2021.” XNUMX”.

Moreover, he explains, although some long contracts are under pressure (given the drop in spot rates) and even with some being able to be reduced, these could still be at levels higher than the values ​​observed in 2021.

Always advising cargo beneficiaries, Jensen asks to consider the 2021 Xeneta data that showed in the worst case a differential of US$10.000/FEU between spot rates on the Asia-North Europe route, therefore which notes “there was ample room for large falls in spot rates, simultaneously with an increase in contract rates”.

Congestion, strikes and politics…  

According to Lars Jensen, the congestion continues to affect the maritime industry (especially at the USEC and with hints of reappearing at the USWC) and now appears to be no closer to a resolution compared to 3 weeks ago. On the other hand, the increase in strikes, especially in Europe, where workers essentially want compensation for the effects of inflation, seems to be a permanent fixture in the near future. This without considering the latent conflicts in the USWC in the US where truckers, especially in the port of Oakland, railway workers and ILWU longshoremen, still do not give signs of white smoke that reassure the immediate expectations of the industry.

It also argues that, as expected, there is growing political pressure to "do something" about the competitive situation in the industry; On the strategic front, this has great disruptive potential for the industry. In fact, the greater power granted to the Federal Maritime Commission (FMC) by the US Government to monitor the behavior of shipping lines in the application of surcharges for detention and demurrage and, now, to make the information public on the amount of TEUs they mobilize; Measures to which are added the rate discounts by CMA CGM in favor of fighting the consequences of inflation for French consumers are the clearest examples.

But in this sense, Lars Jensen warns that "be careful what you wish for, you may get it", since any change will have many domino effects deep in the supply chains, so he recommends all stakeholders to "think carefully in all these aspects and not only look at the immediate effects of any change”.

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