Shipping companies’ profits were up by 900% to around $150 billion in 2021, according to a Bloomberg report. And with ocean shipping rates expected to high elevated well into 2022, another year of booming profits for global cargo carriers is in store, as well as pain for small firms across the globe.
The spot rate for a 40-foot container to the US from Asia topped $20,000 last year, including surcharges and premiums, up from less than $2,000 a few years ago, and around $14,000 until recently. Limited container capacity and port congestion mean that longer-term rates set in contracts between carriers and shippers are an estimated 200% higher than a year ago, which suggest prices are set to stay high for the foreseeable future.
Smaller importers and exporters are set to be hit hardest, especially in poor countries that rely on carriers to haul everything and can’t easily pass on extra costs. The situation is throwing a spotlight on the market concentration of shipping lines, and their legal immunity from antitrust laws.
Amruth Raj, managing director of Green Gardens, a vegetable processor based in rural India, said:
“Small- and medium-sized enterprises are being badly affected. After container rates shot up in the past year, more than 50% of our capital was wiped out when European buyers balked at the higher costs. They exploit our desperation.”