We know that several shipping companies made billions of dollars of profits in recent times.
Each crisis, be it the pandemic or the war in Gaza or the closure of the Suez Canal has generated huge profits for shipping companies.
With so much money made, these shipping companies have ordered more and more new ships.
However, there is something called too much of a good thing. Now it looks like the yards are full of orders for a few years to come. The ship owners who made a lot of money are now dreading that when the crisis gets sorted out, there will be a situation of too many ships chasing the same cargo.
This will lead to a collapse or a drastic reduction in freight rates.
Therefore, what is the solution?
We give below a sample of how this excess profit is being ploughed into other areas of business.
One Greek owner with 80 tankers purchased 100’s of properties around the world including a 2% stake in the Greek property company, Lambda development. Lambda development is building luxury suites around old Athens’s airport at the beachfront.
Evangelos Marinakis is investing in a soccer club, in media and renewable energy. He purchased Premier league soccer club Nottingham Forest and has spent more than $300Mn to improve the team.
John Fredriksen, the Norwegian Shipping Magnate who owns Frontline which operates 80 tankers has pumped around $12Bn in the last 15 years into businesses such as fish farms, real estate, consumer finance and oil well servicing. His property development company bought Aker Brygge complex which commands huge commercial space on Oslo’s waterfront.
CMA CGM, the world’s third largest container operator paid $1.7Bn to buy Altice Media which runs French news channels and also the popular RMC radio station. Since 2022, Rodolphe Saade (owner of CMA CGM) has purchased 3 French newspapers and has taken a 9% stake in Air France-KLM merged company with an investment of Euro 240Mn.
If you want to know the mother of all ship owners, it is Onassis who owned airlines, oil companies, gold mines and much more. In addition, he could afford to attract and keep Maria Callas and, no less, Jacqueline Kennedy!!
The Top 10 container lines quadrupled their profits in 2021 and 2022 to an average of $158Bn.
There is no cyclical business bigger than the shipping industry. Each time a shipping company benefits, thanks to Global crises, the huge profits they make are getting ploughed into multiple land-based enterprises.
The take home lesson is that, if you want to be in the shipping industry, you have to be smart enough to snatch opportunities during the upside and take out the money and invest it elsewhere outside of the shipping industry.
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