The shipping industry in Athens anticipates higher earnings amidst geopolitical conflicts and supply uncertainties.
Extensive Investments
That’s to say that geopolitical conflicts and doubts about the supply of new ships mean shipowners are bracing for a prolonged earnings boom.
Andy Dacy, managing director and group head of the global transportation group at JPMorgan Asset Management — whose multi-billion dollar portfolio includes extensive investments in the maritime industry, encapsulated it best. “Thinking about shipping over the next 10-15 years, one could argue that even though we have these challenges, we are moving into a golden era albeit underpinned by difficult dark things,” he said at a forum organized by Capital Link during the Posidonia shipping week.
The cost of hiring ships has been about a third higher than the average for the last ten years so far in 2024, according to Clarkson Research Services Ltd., a unit of the world’s largest shipbroker, propelled in part by ships sailing thousands of miles extra to avoid attacks in the Red Sea. Similarly, Russia’s invasion of Ukraine has led to trade dislocations that are forcing oil tankers on far longer voyages than would otherwise be the case. Speaking at events organized as part of the Posidonia conference in Athens, some executives said they were eying a potentially protracted era of higher earnings, based in part on a bet that the global geopolitical environment will remain more dangerous for longer, and a supply of new ships that remains relatively low.
Earnings Soar
Although there has been some ordering of new ships as earnings soar — causing some nerves about whether a boom can truly be sustained — by historical standards, the pace of buying has been relatively subdued given strong freight markets.
That’s largely because shipowners aren’t sure what the fuel that will replace traditional oil propulsion will be, meaning that vessel orders haven’t accumulated in the same way as during shipping’s last great boom period in 2008.
“We have not seen any alternative fuel that is either available or very promising for the future,” said Ioannis Alafouzos, chairman of Okeanis Eco Tankers Corp. “We are quite pessimistic about alternative fuels. Frankly speaking, we do not know where we are going, so we are sticking with conventional engines for the time being.”One Greek owner said he expects that the impact of the attacks on shipping in the region could be felt even more acutely in the second half of the year for container and bulk commodity ships as those fleets get even more stretched out. That leaves owners bracing for a world that is more volatile for longer.
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Source: EconomicTimes
