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. 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, says an article published in wsj.
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. 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.
While the demand for retail goods is lifting container markets, a recovering global economy is also churning through more raw materials — boosting the revenues of bulk ships that carry industrial commodities. In that sector, earnings recently hit an 11-year high and are showing little sign of abating down the line with consumption expected to remain firm for the rest of the year.
“Strong demand for natural resources combined with Covid-related logistical disruptions” are supporting spot and future freight rates, Ted Petrone, vice chairman at Navios Maritime Holdings, which owns a fleet of bulk carriers, said on an earnings call last week. “Supply and demand fundamentals going forward remain extremely positive.”
Such is the extreme strength across shipping that some bulk carriers have even turned to carrying containers on their decks. Golden Ocean Group Ltd. is among the companies that said it’s looking at the idea. While it could spur additional profits in an already windfall year for owners, its not without its risks as bulk carriers aren’t designed to carry the giant boxes.
“It tells a story about the special situation we are in,” in the container market, Golden Ocean’s chief executive officer Ulrik Andersen said earlier this month.
While for many shipping sectors Covid has brought a boom, for oil tankers it has meant loss-making trades for much of 2021 and owners effectively subsidizing the shipment of crude oil.
With OPEC+ still keeping a chunk of supply offline there are too many ships and too few cargoes, keeping earnings depressed. That has burned one of the hottest trades in the sector at the start of the year — bullish oil tankers positions on the hope of a summer surge in oil demand.
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