Original title: another inflation warning? High freight is expected to continue, container shipowners are optimistic about the prosperity of 2022

Source: Wande Information

With the surge in global demand for goods and freight, the demand for container ships is at an all-time high, and freight rates remain high.Executives who lease ships to shipping carriers don't expect the boom to end any time soon.Their optimism could be another sign of inflation.

Transport costs soared as the epidemic disrupted global supply chains and congested many ports around the world. According to the Financial Times, data from Kuehne+Nagel, one of the largest freight forwarders in the world, show thatThere are currently 584 container ships stranded outside ports around the world, a figure that has almost doubled since the beginning of the year.Today, the global average freight cost for a 40-foot container is nearly $10, 000, three times what it was at the beginning of the year and almost 10 times its pre-epidemic level, according to Freightos.

According to FreightWaves, executives of container ship chartering companies told the Capital Link New York Maritime Forum this week that recent deals strongly suggest that liner companies believe high freight rates will last until at least 2022, citing three pieces of evidence.

First of all, liner companies are finalizing leases in advance-not a few, but a large number. Evangelos Chatzis, chief financial officer of Danaos Corp. "liner companies are eager to determine tonnage even one year before the current lease expires, which is for a period of 4-5 years. They know more about the flow of trade than others, which shows their view of the market. "

Graham Talbot, chief financial officer of Seaspan's parent company Atlas Corp., said the company has completed 58 pre-determined leases this year, accounting for nearly half of its current floating fleet. Talbot also said it had no expiring leases for the rest of the year and only a few next year and the year after.

Second, the acquisition of ships. Aristides Pittas, chief executive of Euroseas, said: "We have not only seen charterers prepare for ships with a four-year charter a year in advance, but also have seen them buy ships delivered a year later."

Third, the liner company pays the rent in advance in the first year of the multi-year lease. Constantin Baack, chief executive of MPC Containers, said: "in some cases, we can pay part of the rent in advance, so although the rent is an average of $40, 000 a day, it will be paid in advance in the first year."

"for example, the rent is $45000 a day, but we receive $80, 000 in the first year, and then gradually reduce it in the next few years," said Chatzis of Danaos. The lessee does not know what will happen in the next one, two or three years, and the rent they want to pay matches the huge profits that can be foreseen at present. "

In addition, in terms of ship supply, container ship leasing companies believe that new ships built in 2022 will not pose a threat to the prosperity of the market: although current orders are 23% of the water fleet, but the vast majority of large ships ordered will not be delivered until 2023-24.

Euroseas's Pittas pointed out that ship delivery in 2022 will be very small, in addition, global supply chain disruptions and power cuts in China will also have an impact on shipyards. "I think the delivery of the new ship will be delayed." Pittas added that before the arrival of the wave of new ship deliveries in 2023-24, "I can't imagine any substantial correction [in the market]."

Atlas's Talbot also believes that the risks posed by ship supply to the market boom will not begin to emerge until 2023.

On the demand side, Global Ship Lease CEO George Youroukos expects disruption in the export supply chain related to the outbreak to continue, which will lead to a further increase in the backlog of goods and longer demand for ships. "I don't think anyone believes that we will fight the epidemic globally in the next 12 months," Youroukos said.

On the wholeYouroukos believes that the strength of the container market will not be a flash in the pan and that unless there is a Black Swan incident, "at least for the next few years, this momentum will continue."

When asked about the recent drop in spot freight rates from all-time highs, Youroukos said it was a positive phenomenon. Youroukos said freight rates must be high enough for liner companies to pay high charters, but not too high, so as not to undermine ship demand.

"Freight rates have dropped slightly, which I think is healthy," Youroukos said. We hope that consumers will have confidence. We hope that consumers will have the ability to spend. We all know that inflation is rising. "

Global supply chain bottlenecks and labor shortages have pushed up production costs, many companies have announced price increases in response, consumers can not help but pay for this.Us CPI rose 5.4% in September from a year earlier, the same rate as when the economy restarted in June and July, according to data released by the U.S. Department of Labor. Meanwhile, US PPI rose 8.6 per cent in September from a year earlier, the highest level since November 2010.