With rising demand for goods and the collapse of global supply chains under the weight of the epidemic, freight rates are rising and the global shipping industry recorded its biggest daily gain since 2008.

Profits are soaring for almost all types of ships, whether they are giant container ships stacked with steel boxes, giant bulk carriers that can hold thousands of tons of coal, or ships designed to carry cars and trucks.

As about 80% of the world's traded goods are transported through fleets, a wave of higher freight rates has penetrated into every corner of the economy. The boom of 2008 led to a new wave of ship orders, but the rally was quickly diluted as demand fell sharply as the financial crisis triggered the worst global recession in decades.

There are two reasons for this round of skyrocketing freight. After the COVID-19 epidemic, the economy reopened, and the demand for goods and raw materials soared. At the same time, the virus continues to cause global supply chain disruptions, port congestion and ship delays, all of which limit the number of ships that can be used to transport goods across the ocean. This has enabled most companies in the shipping industry to make huge profits in recent months.

According to the world's largest shipbroking company Clarkson Research Services Ltd. The shipping industry recorded its strongest daily earnings since 2008. The only underperforming shipping sector is the oil and gas carrier market, where more bearish forces are coming into play.

"this is a perfect spillover of the hot container shipping market to other industries," said Peter Sand, chief shipping analyst at trade group Bimco.

Container transport is still the focus. Now, it costs $14287 to transport a 40-foot steel box from China to Europe. That figure rose more than 500 per cent from a year earlier and pushed up the cost of transporting everything from toys to bicycles to coffee.

The huge profits of the shipping industry have been reflected in the earnings of AMKBY.US, the world's largest container carrier, which last month raised its forecast for this year by nearly $5 billion. CMA CGM SA, the world's third-largest container carrier, said it would suspend freight increases to maintain long-term customer relationships, underscoring the industry's strong profitability.

Other market segments

While demand for retail goods has boosted the container market, the global economic recovery has also boosted demand for raw materials and increased income for bulk carriers transporting industrial commodities. In the sector, corporate earnings recently hit an 11-year high and show few signs of falling, and consumption is expected to remain strong for the rest of the year.

Ted Petrone, vice-chairman of Navios Maritime Holdings, which owns the bulk carrier fleet, said on an earnings call last week that "strong demand for natural resources and logistics disruptions related to the outbreak" were supporting current and future freight rates. "the fundamentals of supply and demand in the future are still very positive."

Some bulk carriers even began to load containers. GOGL.US is one of the companies considering this approach. While this may generate extra profits for shipowners in an already lucrative year, it is not without risks, as bulk carriers are not designed to transport giant containers.

Oil tanker sluggish

While the COVID-19 epidemic has brought prosperity for many shipping industries, for oil tankers, it means trading is losing money for most of 2021, and shipowners are actually subsidizing crude oil shipments.

As OPEC + still limits crude oil production, there are too many ships and too few cargo, resulting in low earnings for oil tankers.

However, as onshore oil inventories fall, analysts continue to expect oil prices to rebound. Freight rates may start to rise in October due to lower inventories and increased demand for tankers, Pareto Securities analysts said in a customer report.

But for now, tankers are still the only underperforming sector in the shipping industry. The ClarkSea index, which tracks daily earnings in different shipping industries, has recorded its longest monthly gain on record.

Other market segments are also profitable. The cost of chartering car carriers has reached its highest level since 2008. Freight rates for grocery ships loaded with heavy equipment are also soaring, fuelling a price boom driven by container and bulk shipments.

"the cost of chartering containers is very high, and so is dry bulk cargo," said Alexandra Alatari, an analyst at Arrow Shipbroking Group shipping. "the fundamentals are strong enough to support freight rates to peak in any other year."