The ocean shipping has never been so hot for carriers as they take profits to new heights. However, is there an end to it?
The shipping industry has been accustomed to lower margins. And by history( as a guide) we can assume that this too will fade away soon. However, we need to incorporate the factors that lead to that boom, and these factors suggest that shipping industry is all set to another 2-3 years of higher margins and profits.
So what led us to this conclusion??
First of all, as markets are still sluggish to return back to normal from both( demand and supply ends) . Let us discuss the deriving factors in detail:
1) The booming (surge in demand) caused by pandemic-derived shift in consumption habit is going to sustain.
2) The overall supply change disruption at ports reducing the capacity of the market.
As these two factors come to an end, then there will surely be a correction in the market. However, these factors are too stubborn to go away and a prolonged “return back to normal” is expected.
CATALYST VIEW ON THE SITUATION:
Although ocean carriers are all set for long-lasting profits-but as ship orders continue to increase-it will return to sufficient capacity to meet the demand and driving the overall profits down!
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