A global shipping consultancy firm, Drewry, has made projections that container shipping firms may rake in $143 billion in revenue this year despite concerns of weak trade growth and fleet oversupply in the market.
In its latest report, Drewry, said a gradual market recovery is now expected in the shipping business as rates assume an upward swing.
Specifically, Drewry estimates that revenue for 2016 may reach $143 billion, although this means a negative trend when compared to $218 billion earned in 2012.
Despite the projected earnings, Drewry still expects container carriers to record a collective operating loss of $5 billion in 2016.
“We forecast industry profitability to recover next year, thanks to improving freight rates and slightly higher cargo volumes, and so record a modest operating profit of $2.5 billion in 2017,” it said.
While average freight rates are expected to improve next year, this will follow several years of negative returns and will still leave pricing well below the average for 2015, according to the shipping consultancy.
Meanwhile, the report said a key unknown remains carrier commercial behaviour has proven unpredictable and counterintuitive, while fuel prices are also on the increase and carriers are extremely wary of costs.
Drewry said that this may support higher freight rates via the bunker surcharge mechanism, but it also increases operational costs.
“The fact that the order book is at a virtual standstill is a major positive as is rapidly increased scrapping. But even so, the next two years will still be very challenging on the supply side with annual fleet growth of between 5 per cent and 6 per cent and many more ultra large container vessels (ULCVs) to be delivered,” Drewry said.
It noted that privately-owned container carriers could risk losing shippers’ trust if they do not provide any data on their level of indebtedness and balance sheet strength.