Maersk\'s profits this year may exceed those of the past seven years combined

The world's shipping industry seems to be dysfunctional, with ports crippled, containers mismatched and freight rates sky-high. It will take a long time to repair.

In early February, as many as 40 container ships were waiting to dock at the ports of Los Angeles and Long Beach. By May, the terminals were carrying a record 1.9 million containers, nearly double the level at the time of the COVID-19 outbreak in March 2020.

In a more startling development, a huge container ship with a capacity of 20,124 containers has been stuck in the Suez Canal for nearly a week, hindering the passage of hundreds of ships between Asia and Europe.

Analysts expect shipping giant Maersk (AMKBY.US) to make more profit this year than in the past seven years combined. The announcement came after the company sharply doubled its forecast for full-year 2021, saying it was being boosted by a "blowout" in demand levels.

Data showed that on June 18, the Shanghai Container Freight Index rose threefold in a year, hitting another record high, while the price of routes from China to Europe and the United States rose fivefold. In late June, 1 standard 20 feet container freight, Shanghai to Germany, Hamburg's seaport is about $6000, Shanghai to the port of Los Angeles in the western United States, approximately $9000, Shanghai to the east of New York harbor, about $10000, China to Europe, the United States freight routes, compared to the same period of last year's gains in 5 to 10 times, is still a cabin is hard to find, Prices continue to hit new highs.

Globally, since the outbreak, by September last year, China's export volume had exceeded the seasonally adjusted level in January and February, as demand for medical equipment and spending on durable goods in developed countries increased. This has led to a glut of containers at European and North American ports and a shortage of containers in Asia, driving prices on export routes to astronomical levels.

As a result, more than 360,000 empty containers were shipped out of the Port of Los Angeles last month, about twice the usual seasonal rate.

If you think these troubles will sort themselves out as the global economy recovers, you are seriously mistaken. With freight rates at record highs, it could take years to get back to normal.

While it's worth noting that the freight industry has been cutting back on investment, Maersk's capital investment since March 2019 is just $2.9 billion, about the same as in the first quarter of 2014, so there's a lot of work to be done to solve the shipping problem, including building new ships, berths and port loading cranes.

It can be predicted that the current situation of shipping capacity constraints will lead to another shipbuilding binge, and that at some point the world will face a container surplus like the one in 2016.