Displaying items by tag: Customers: Profiteering
As container lines have done relatively well financially during the Covid-19 pandemic, cargo owners have faced inflated transport costs and lower service quality, with many shippers reporting cargo roll-overs and carriers prioritising higher-paying spot cargo, according to container shipping consultancy and analyst Drewry.
The firm according to LloydsLoadingList, reports that container shipping lines are one of the few sectors that can be said to be having a good pandemic, but their positive financial performance risks them appearing to be profiteering from the crisis and may lead to carrier-shipper animosity. Drewry indicated that it did not believe lines have been profiteering but that they needed to do more to develop a better shipper-carrier dialogue in order to prevent possible animosity from building.
It noted that, “perversely, despite a sudden fall off in demand for their services, lines look set this year to make more money than they have in a long time as their crisis-management tactics – essentially blanking voyages – has paid off handsomely. In our latest Container Forecaster report, published at the end of June, Drewry estimates that the industry secured an operating profit (EBIT) of around $1.4 billion and margin of 3.2% in 1Q20, pretty much on par with the same quarter of last year.”
It said that while the first quarter was not a full test of the industry’s COVID-19 coping mechanism as most countries did not enter lockdown until quite late in the period, “all signs point to operating carriers having not only survived the market shock, but even benefitting from it, with spot market rates soaring and a number of previously guarded companies now upgrading quarterly and full-year guidance”.
But the same cannot be said of other stakeholders, Drewry said, highlighting that “cargo owners have had to contend with greatly inflated transportation costs, but lower service quality. Many shippers have been experiencing cargo roll-overs, including some contract BCOs that have told Drewry carriers are prioritising much higher-paying spot cargoes”.
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