Picture by: Fredrick Filix
Global shipping rates are skyrocketing this year as they hit rates last seen in 2008. This has occurred due to rising demand in combination with the collapse of global supply chains due to the plethora of bottlenecks that Covid-19 has created. Whether it’s massive container ships, bulk carriers who house thousands of tons of coal or even specialised vessels who carry trucks and vehicles, earnings for almost all types of ships have seen exponential increase.
Since the rollout of the Covid-19 vaccines, governments are cautiously trying to reopen their economies resulting in a steady increase of demand for goods and raw materials. The effect of the rising demand is supercharged due to the disruption in supply chains that Covid-19 has caused. The closing of parts of ports, ports not being able to work at full capacity and delayed ships have limited the number of vessels at sea. This has allowed majority of the shipping industry to charge exceptional rates.
According to Clarkson Research Services Ltd., the shipping industry is showing its strongest daily earnings since 2008. “I’m not sure the perfect storm covers it, this is just spectacular” commented Peter Sand, chief shipping analysist at trade group Bimco.
Container shipping has seen the most dramatic rise in prices. It now costs $14,287 to send a 40-foot steel box from China to Europe, which is a price hike of almost 500% from just a year earlier. This has caused the prices of transport to increase, and business in turn must reflect this added cost in their market prices.
Picture by: Jonas Tebbe
The earnings reflected through container shipping is so good that even some bulk carriers (ships designed to carry unpacked bulk cargo like coal and grain) are experimenting with the idea of transporting containers onboard their vessels. Golden Ocean Group Ltd. is amongst the companies that are looking into the idea. “It tells a story of the special situation we are in” said Golden Ocean’s CEO Ulrik Andersen.
However, even though many sectors of the shipping industry have enjoyed a boom in prices, for oil tankers, it has been a loss-making year. As OPEC + countries keep most of the supply offline, there are too many ships and not enough cargo to transport. For now, the tanker market remains the sector of the industry where freight capacity has tightened. Experts do believe however that rates will increase slowly in October for oil tankers as well.
September 13th 2021 | 10:20 AM