Significantly higher ocean freight spot rates than expected for this time of year, combined with double-digit gains for contract rates, are set to equate to liner profits on an unprecedented scale, Freight Waves reports.

On Monday, U.K. consultancy Drewry predicted that container shipping lines will post aggregate earnings before interest and taxes (EBIT) of $80 billion this year, and “if freight rates surpass expectations in the remainder of the year, we would not be surprised to see an annual profit line in the region of $100 billion.”

That’s the mirror opposite of the industry’s prior long-term performance.

McKinsey & Co. estimated in a report published in February 2018 that carriers “destroyed over $100 billion in shareholder value over the last 20 years.”

Lars Jensen, CEO of consultancy Vespucci Maritime, commented, “In essence, it can be argued that in a single year, the industry will have made up for 20 years of losses.”

George Griffiths, editor of global container freight at S&P Global Platts, in an interview with American Shipper, said: “I hold my hand up. I was one of the people who thought rates would come down and I wasn’t alone."

“I had thought rates would come down after Chinese New Year. Here we are six months later and rates are still high and actually increasing. I would now be surprised if we saw any significant downside before the end of this year,” said Griffiths.

“The demand we’re seeing at the moment is completely unprecedented and we haven’t actually hit peak season yet. Everyone’s planning a long way ahead, which is why we’re already seeing people front-load shipments ahead of Christmas. For the next quarter, we’re expecting rates to stay pretty bullish if not rise further — and certainly not tumble from the point they are now,” said Griffiths.

Patrik Berglund, CEO of rate-data platform Xeneta, said during an interview with FreightWaves last week, “If you look at what we’re facing now — a holiday season, an early peak season, hurricane season, Golden Week, idle tonnage of just 1% versus 10% 12 months ago — I struggle to see how this is going to get better in the short term.”

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