Are ships a smart way to protect yourself from today’s sky-high inflation? Many business owners believe this, although well-known economists have demonstrated the historical flaws of such views.
However, many would argue that today’s once-in-a-generation economic outlook is favourable for shipping. Real hard assets like ships should appreciate in a high-inflationary environment, according to Khalid Hashim, general director of Thai dry bulk company Precious Shipping. Furthermore, Hashim believes that, as commodity prices continue to rise, shipping costs will rise as well, especially given the probable increase in ton-mile demand as a result of Russia’s ongoing war in Ukraine. Tim Huxley, chairman of Hong Kong-based shipowner Mandarin Shipping, warned that if inflation shrinks growth and prompts a recessionary environment, then it is not good for anyone.
Roar Adland, shipping professor at the Norwegian School of Economics, agreed that owning real assets, like ships, can be a way to protect an investment portfolio.
“High energy and steel prices will push up newbuilding and demolition prices and so be supportive of the entire secondhand price curve,” Adland said while going on to echo Huxley’s concerns that high prices could eventually lead to demand destruction. “Using ships as an inflation hedge may sound good but needs careful thought,” said Dr Martin Stopford, the world’s most famous maritime economist, going on to detail previous shipping cycles that have had to contend with bouts of high inflation.
