Our 2022 Container Shipping industry outlook was prepared before the invasion of Ukraine in late February 2022; thus, it does not reflect the impact of the conflict on global supply chains and container liners. While it is too soon to quantify the extent and duration of the disruption, it is already clear that the ripple effects will be immense and long-lasting. How the industry’s many stakeholders adapt to their changing environment will affect not only their own fortunes but those of the global economy.

After so many lean years, carriers are maximizing profits while they can

The container shipping industry has enjoyed the occasional good year in the past, but it never saw anything like 2021. Carriers in 2021 did more than merely recover from their pre-pandemic slump; they posted results unprecedented in the history of the industry. As recent rate negotiations demonstrate, container liners are taking full advantage of their pricing leverage while it lasts. And it should last for a while longer—barring unforeseen disruptions, 2022 is shaping up to be another banner year for the industry.

But have carriers learned the lessons of the down years? True, they are deploying their massive cash hoards cautiously, as if bracing for another 10-year slump. But they have directed more than 26% of their earnings toward debt and equity holders, compared with less than 19% toward their own operations—while keeping the remaining 55% of their powder dry as they reckon up the cost of converting their existing vessels to dual-fuel use.

There’s good reason for caution. Shipping managers have long memories, and they won’t soon forget that even as shipping charges and carrier profitability have rocketed upward, service levels have continued to deteriorate. When the cycle turns, shippers will have little inclination to offer carriers concessions or refrain from demanding rate relief. Container shipping executives may want to bear in mind that in their relationships with customers, just as in their investment allocations, the decisions they make today will reverberate for years to come. More money does indeed bring problems of its own.