Profits Abound as Shippers “Cash In” on Disruptions

EAGLE POINT, OR – Currently, around 16 percent of the global dry bulk fleet is tied up waiting to unload at various ports worldwide, creating inefficiency and increased shipping costs according to Jay O’Neil with HJ O’Neil Commodity Consulting.

In a good news-bad news scenario, O’Neil explains that following the Phase One Trade Agreement, Chinese demand for grain and oilseed imports has been great for farmers, unfortunately, it’s also led to the run-up in freight rates too.

For the past 13 years, the shipping industry has been dealing with stagnant rates so when the uptick in demand basically occurred overnight, shippers were not prepared. In addition, it takes years to build a new ship so bulk ocean freight demand is expected to continue to outpace fleet growth for the next two years.

Not to mention that the increased demand and short supply of logistics is a money-making proposition for the shippers. Combined operating profits ($37.24 billion) in the third quarter for container shipping lines were nearly equal to their total combined earnings from 2010 to 2020 says Informa, and “the top 10 container shipping lines, excluding MSC, have reported nearly $80 billion for the first nine months of this year, with another $35-$40 billion expected for the fourth quarter.
(SOURCE: All Ag News)