Rising fuel costs lead to Drewry downgrade on carrier profitability in 2018.
Making money in the container shipping game is as much to do with luck as anything else. Whether a carrier ends the year in the red or black is often decided by external forces outside of management control, such as oil prices or the macro-economic inputs that drive demand for their services.
An unexpected surge in the former has dramatically altered the cost base of carriers and has forced Drewry to significantly downgrade its profit expectations for the industry this year. Following research for our upcoming Container Forecaster report to be published at the end of June, we now believe the industry will only break-even at best in 2018, having previously expected an operating profit of approximately $5 billion.
The importance of fuel prices on carrier results was demonstrated yet again in the first quarter 2018 income statements. Despite relatively strong demand growth and higher sales, a 20% year-on-year rise in bunker costs saw a majority of the lines post operating losses. In addition to higher fuel costs lines have also had to absorb extra cost from a resurgent charter market
