Shipping companies are on a spending spree

economictimes.indiatimes.com:

shipping companies are plowing their pandemic windfalls into orders for new vessels on an unprecedented scale, making an industry known for hair-raising cycles of boom and bust more vulnerable in the latest downturn. Container carriers like MSC Mediterranean Shipping Co., A.P. Moller-Maersk A/S, CMA CGM SA and Hapag-Lloyd AG — all backed by European billionaires — are spending record profits gleaned during the health crisis to splash out on new models mostly from Korean and Chinese shipyards. This has pushed the global order pipeline to a historic level — almost $90 billion by one estimate. But the tide has turned in the notoriously cyclical sector as freight rates flirt with below-breakeven levels and fears about overcapacity re-emerge. “Too many large container ships have been ordered,” said Erik I. Lassen, chief executive officer of Danish Ship Finance A/S, a company providing vessel financing. He noted that deliveries are now starting at a time when supply chains are running more smoothly and demand for freight transport is back to pre-pandemic levels. “There will be shipowners — tonnage providers — out there that will have stretched themselves,” he said in an interview. “Although the last couple of years have been profitable for shipping, the accumulated earnings are far from enough to fund the investment in new technology and ships in the coming decade.”

The outlook has grown cloudier for the tycoons, whose companies have begun a chorus of negative forecasts for the coming months. On Friday, France’s CMA CGM, controlled by billionaire Rodolphe Saade and his family, warned about deteriorated market conditions and said new vessel capacity “is likely to weigh on freight rates.” Earlier this month, Zim