Ships from bygone years are again hitting the seas. The rust buckets have become gold mines as they are repaired and fueled to meet the growing needs of shipping companies. The shortage of new vessels has made the value of the aging container ships skyrocket. Shipping companies are requiring long-term leases of three to four years on the aging ships as builders scramble to construct new vessels for service.
The Synergy Oakland is a mid-sized ship flagged in Cyprus. It has the ability to carry over 4,200 20-foot containers. In 2019, the Greek firm, Euroseas purchased the ship for $10 million. In the last 100 days, the ship has made $21 million. Over the course of the four-year lease, it will make $61 million.
Container capacity has grown by 4.5% due to being able to keep the rust buckets afloat. Ship owners continue to lease aging vessels for record rates in the once-in-a-generation bull market. In May of 2022, the cost of shipping containers rose by 30.1% which is the highest record increase in a month for long-term ocean freights ever achieved.
The high rates are fueling the higher prices on all items making it difficult for consumers. It can often take a year or more before consumers feel the full brunt of the high shipping price costs.
The ship, Navios Spring, which sails from California to China has been chartered for three years at a price of $60,000 per day which is a staggering increase over what it was two years ago at a cost of $8,250 per day. The ship was built in 2007 and is flagged in the Marshall Islands. It cost $42 million to build but it has earned $65.7 million in three years.
The Navios Amarillo is the sister ship to the Navios Spring. It is booked through 2028. It is projected to earn $75 million which is far more than the $51 million it costed to build.
Profits of the Shipping Industry
The container shipping industry has made a profit of 59.3 billion in the year’s first quarter which is a substantial increase over the $19.1 billion it made during the same period a year ago.
The second largest container line in the world is Denmark’s Maersk which controls 17% of the market share. They recently posted earnings of 19.3 billion which is a 55% increase compared to the previous year.
Recently the Mediterranean Shipping Company (MCS) became the world’s largest container line, but they are not publishing financial reports.
The Forecast of Shipping Prices
In the last year, 503 second-hand container ships have been sold. MSC purchased 200 of the container vessels. At this time, no container ships are being scrapped and many of the vessels are 10 to 15 years old.
MSC bought the ship Xin Feng Yang Pu which sails in the South China Sea. The ship made $70 million in the last month, but the ship had sold for only $7 million in 2007.
At this time, there is no end in sight to the boom. Shipping companies have ordered 555 container vessels valued at $42.5 and booked 2008 vessels worth more than $18.4 billion. The ships being built will be some of the largest ever created with many over 400 meters long.
If you would like to learn more about the shipping forecast, contact Sobel Network Shipping Co., Inc. for more information.
