- Old container ships sold and chartered at record prices
- Bumper long-term charters lock in costs for consumers
- High shipping costs driving up inflation worldwide
- Wave of huge new container ships due in next two years
Shipping companies are transforming rust buckets into gold mines in a modern-day alchemy that could fuel already rampant inflation for years to come, reports Reuters.
Pandemic lockdown and vessel shortage
The disruption to world trade caused by pandemic lockdowns and a shortage of new cargo vessels has pushed freight rates for ageing container ships to record highs.
Cashing in on the boom, shipping firms are locking in long-term leases lasting three to four years, which means consumers could carry on paying the price for the surge in costs until hundreds of new ships on order come into service.
Take the Synergy Oakland, a mid-sized vessel flagged in Cyprus that can carry more than 4,200 20-foot steel containers. Greek firm Euroseas bought it in 2019 for US$10 million (S$13.8 million) when it was already a decade old.
Highest daily freight rate in history
As world trade spiralled into chaos last year, it raked in US$21 million in just over 100 days at the highest daily freight rate in history for a ship of its size. It squeezed in one more short-term charter earning around US$10 million in the space of two months before going out on a four-year lease for US$61 million in May, a sixfold return in itself on the purchase price three years ago.
“That was almost the perfect play in a rising market,” Mr Symeon Pariaros, chief administrative officer of the shipping firm, told Reuters. “We’ve not seen something like that in the history of the container market.”
Did you subscribe to our daily Newsletter?
It’s Free! Click here to Subscribe