Shipping companies' profits hit $150B last year

Shipping companies' profits hit $150B last year, with rates to stay high well into 2022

Shipping companies' profits hit $150B last year, with rates to stay high well into 2022

Shipping companies pulled in estimated profits of $150 billion in 2021 — a nine-fold annual jump after a decade of difficulty eking out any gains, Bloomberg reports.

Ocean shipping rates are expected to stay elevated well into 2022, setting up another year of booming profits for global cargo carriers — and leaving smaller companies and their customers from Spain to Sri Lanka paying more for just about everything.

The spot rate for a 40-foot container to the U.S. from Asia topped $20,000 last year, including surcharges and premiums, up from less than $2,000 a few years ago, and was recently hovering near $14,000. What’s more, tight container capacity and port congestion mean that longer-term rates set in contracts between carriers and shippers are running an estimated 200% higher than a year ago, signaling elevated prices for the foreseeable future.

Large customers of sea-borne cargo like Walmart Inc. or Ikea have the heft to negotiate better terms in those deals, or absorb the added expense. Smaller importers and exporters — especially those in poor countries — that rely on carriers to haul everything from electronics and apparel to grains and chemicals, can’t easily pass those costs along or weather long periods of stretched cash flows. The situation is throwing a spotlight on the market concentration of shipping lines, and their legal immunity from antitrust laws.

“Small- and medium-sized enterprises are being badly affected,” said Amruth Raj, managing director of Green Gardens, a vegetable processor based in rural India. After container rates shot up in the past year, more than 50% of his company’s capital was wiped out when European buyers balked at the higher costs. “They exploit our desperation.”

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