The supply chain crunch of 2021 is exacerbating pressure in some regions and on some companies whilst profiting others with greater monopoly.
(PRUnderground) November 11th, 2021
Analysts at EM Braxton Universal say the timeline for supply chain recovery is deepening well into 2022, and the surge in profits of freight operators further supports this, signalling that there is no end in sight to the global supply chain crisis. Congestion outside ports is intensifying as retailers and manufacturers fight to keep up with swelling demand as economies emerge from the Covid-19 pandemic with pent up savings and enter the holiday season.
EM Braxton Universal analysts believe that each link in the supply chain, where availability is short and demand is high (spanning shipping lines, port bottlenecks, disruption in production, and shortage of labour and transport, to name a few), have created a situation that allows input costs to soar dramatically. In turn, profits of freight carrying companies have increased in tandem, while supply woes continue to plague others.
Maersk, the $56 billion Danish firm, reported a profit of $5.44billion for the September quarter, more than five times that of last year and a rise in EBITDA to almost $7billion over the last 3 months ending September, which is triple on last year’s result despite a lower volume of containers in ports. This is also the most profitable quarter the shipping company has enjoyed in its 117-year existence.
“The ports are not working as well as they should do, so we can’t discharge containers as fast as we would like. It’s hard to see exactly when the situation will improve. Our customers are dealing with super high customer demand, and on top of that they have very low inventory,” said Chief Executive Officer, Soren Skou of Maersk.
Mr. Yuki Morinaga, Chief Finance Officer at EM Braxton Universal commented that that this speaks to the amplified demand and shortage of containers, of which he expects to worsen well into the first quarter of next year, shattering overambitious illusions that the logistics dilemma will resolve by the festive season.
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