Bumper confidence in shipping industry despite Suez Canal crisis as global trade forecasts recovery

Thu 8 Apr 2021
Posted by: Noelle McElhatton
Trade News

Evergreen Marine, the shipping company whose vessel blocked the Suez Canal for almost a week, has ordered another 20 VLCSs (very large container ships) of similar size, as the shipping industry ordered a record number of container ships last month.

A total of 72 ships were ordered the FT reports, in a sign that global trade is bracing itself for a recovery after the pandemic.

Ten-year high

The orders amount to a capacity of 866,000 20-foot containers (TEU) and are the biggest monthly orders since June 2011. Back then, 50 vessels with 570,000 TEU were ordered, according to data from shipping association Bimco and shipbroker Clarksons. 

This comes after ocean carriers had their best quarter in history in Q4 2020, according to Loadstar

Figures from New York-based Blue Alpha Capital for the 11 carriers that report their financials came in at $5.8bn. Assuming non-reporting operators, such as Swiss-Italian shipping line MSC, achieved similar results, the consultancy estimated the cumulative net profit for the period was $9bn.

Profits boom

For the full-year, Blue Alpha Capital calculated a combined net profit of $10.2bn for reporting carriers and an estimated $15.8bn net for all the top-ranked lines.

These 2020 earnings are more than double the total of around $7bn of profit ocean carriers produced in the previous five years. 

Combining spot rate hikes with higher contract rates, carriers look set fair for even greater profits for the first two quarters of the year.

Improved outlook

According to The Loadstar, China’s Cosco Shipping has advised its first-quarter profit will exceed $2bn. The website claims that two European-based carriers will shortly alert shareholders to a much-improved outlook for the half-year.

However, forwarders and NVOCCs are paying a price for the market boom.

The Loadstar also reports that traders and forwarders have been left scrambling for alternatives following Maersk’s decision to “temporarily suspend” spot and short-term contract bookings from Asia after the Suez Canal blockage.