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 Economic Times.
Earning is soaring
Whether its giant container ships stacked high with 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.
Economic reopenings
Rates higher on record
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, a 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.”
Demands remain positive
“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.”
Adding a boom
Those bumper earnings are also being seen in more esoteric markets too. Car carriers now cost the most to hire since 2008. Rates for general cargo ships with heavy equipment are also surging, adding to a boom that is being led by container and bulk shipping.
“The charter rates reported in containers are crazy and it’s the same for dry bulk,” said Alexandra Alatari, a shipping analyst at Arrow Shipbroking Group. “The fundamentals are so strong they support rates that would be the peak of any other year.”
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Source: EconomicTimes
