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AP Moller-Maersk, the Danish shipping company that moves 17 percent of the world’s seagoing cargo, reported its 15th consecutive quarter of rising earnings last week but warned that such smooth sailing is likely over.
Although the company raised its gross revenue forecast to $31 billion this year, it also warned that growth in container shipments will not grow this year and might even contract by a fraction.
Clogged ports will clear toward the end of this year and freight traffic will return to a more normal flow, Maersk predicted.
Spot rates for moving a shipping container on a vessel have fallen 27 percent this year, Drewry Shipping Consultants reported.
However, most shipping company customers are locked into long-term contracts at the premium rates that prevailed at the beginning of 2022. Those customers signed the contracts, even at top prices, for fear of rates rising even higher.
TREND FORECAST: The best is over. Dragflation will drag down shipping. Thanks to the countless trillions that governments pumped into economies to fight the COVID War and the negative and zero interest policies, shippers have reaped windfall profits during the COVID era, as we documented in “Shipper Books Tenfold Increase in Net Profits” (17 Aug 2022).
While those days are over, this year’s rate for shipping one container is about $1,900 higher than last year’s, according to Maersk. Thus, there will be push by customers to renegotiate for lower rates. But with a few of the “Bigs” in full control, the market still has little slack, giving carriers little incentive to change their prices.