The global shipping industry is getting its biggest payday since 2008 as the combination of booming demand for goods and a global supply chain that’s collapsing under the weight of Covid-19 drives freight prices ever higher, says an article published in Indiatimes.
Surge in economy
Whether its giant container ships stacked high with of 40-foot steel boxes, bulk carriers whose cavernous holds house thousands of tons of coal, or specialized vessels designed to pack in cars and trucks, earnings are soaring for ships of almost every type.
With the merchant fleet hauling about 80% of world trade, the surge reaches into every corner of the economy. The boom back in 2008 brought with it a huge wave of new vessel orders, but the rally was quickly undone by a demand collapse when a financial crisis triggered the deepest global recession in decades.
Boom in the market
This boom’s causes are twofold — an economic reopening after Covid that has spurred surging demand for goods and raw materials. Alongside that, the virus continues to cause disruption in global supply chains, choking up ports and delaying vessels, all of which is limiting how many are available to haul goods across oceans. That’s left the majority of the shipping sector with bumper earnings in recent months.
The bonanza is centered around container shipping — where rates are spiraling ever higher to new records, but it is by no means limited to it. The shipping industry is posting its strongest daily earnings since 2008, according to Clarkson Research Services Ltd., part of the world’s biggest shipbroker. The only laggards are the oil and gas tanker markets, where more bearish forces are at play.
“I’m not really sure the perfect storm covers it — this is just spectacular,” said Peter Sand, chief shipping analyst at trade group Bimco. “It’s a perfect spillover of a red-hot container shipping market to some of the other sectors.”
Container shipping area
Container shipping remains the star. It now costs $14,287 to haul a 40-foot steel box from China to Europe. That’s up more than 500% on a year earlier and is pushing up the cost of transport everything from toys to bicycles to coffee.
Those gains are already showing in the earnings of A.P. Moller-Maersk A/S, the world’s largest container line, which hiked its estimated profits this year by almost $5 billion last month. In a sign of just how profitable the industry has become, CMA CGM SA — the world’s third largest carrier — said it is freezing its spot rates to preserve long-term client relationships. In other words, the company is turning away profit.
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Source: Indiatimes
