Dry bulk shipping rates have fallen off a cliff over the last month, yet they remain significantly elevated compared to pre-pandemic levels. Container shipping rates, meanwhile, have plateaued at strong levels, nearing all-time highs. Elevated rates have pushed the industry toward record breaking profits, and that profitability looks primed to continue.
A combination of post-pandemic demand and the beginning of holiday season should keep shippers busy heading into next year. The industry has also begun to diversify, making key acquisitions in the air freight space. Despite the pullback in dry bulk rates, the shippers are forecast to rake in strong revenue, benefitting from ongoing supply-chain disruptions.
Related ETF & Stocks: Breakwave Dry Bulk Shipping ETF (BDRY), Eagle Bulk Shipping Inc. (EGLE), Diana Shipping Inc. (DSX), A.P. Møller – Mærsk A/S (AMKBY), Matson, Inc. (MATX)
Shippers Report Record Profits Even as Rates Cool Off
Since the onset of the pandemic, shipping rates across the globe have skyrocketed. Over the last few months, however rates have begun to cool off, retreating from all-time highs.
Freightos Data shows that the Freightos Baltic Index (FBX), which measures the price movement of 40-foot container rates across 12 major maritime routes, edged higher to $10,525 per 40-foot container for the week ending November 5, 2021. This time last year, the price was $2,264 per 40-foot container, reflecting a nearly five-fold increase over that span.
However, the record run up has stalled in recent months. At the beginning of August, the FBX was reported at $10,380, indicating market rates have plateaued near all-time highs.
Meanwhile dry bulk shippers’ rates have plunged over the last month. The Breakwave Dry Bulk Shipping ETF (BDRY) has fallen roughly 45% from it’s all-time high recorded on October 6, 2021. However, rates are still more than double what they were before the pandemic began.
The recent pullback in rates can be largely attributed to China’s decreased appetite for raw materials in recent months. Per Hellenic Shipping News, China has slowed down purchases of coal and iron-ore, partly due to the ongoing energy crisis, leading to corrections in freight costs for larger vessels. Even with a slowdown in rates, shippers have raked in impressive revenue this year.
MRP has previously reported on the shipping industry’s record profits, noting that the sector has capitalized on sky high shipping rates due to strong demand and relentless supply disruptions. That trend proves to have staying power in the short-term.
Maersk, the largest container shipping line and vessel operator in the world, recently announced impressive earnings. CNN Business writes that Maersk reported sales of $16.6 billion in the third quarter, the highest figure recorded since the company was founded in 1904. Profits were nearly five times higher than the previous year, which the company primarily attributes to surging freight rates.
Similarly, container shipping company Matson also announced blowout earnings, beating EPS estimates by roughly 33%. The company’s operating income from ocean transport surged to roughly $363 million, significantly higher than last quarter’s figure of $201 million, according to Freight Waves.
China’s Cosco, the fourth largest carrier group in the world, announced…
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