London: Flip this ship.
A variation on that 'buy-low, sell-high' strategy is exactly what some container shipowners are opting to do, capitalizing on a hot ocean freight market that shows few signs of cooling off. International Maritime Enterprises, based in Monaco, agreed to sell the container ship Crete I for $46 million, more than four times the $11 million price tag it spent for the 12-year-old vessel in November 2016.
Such returns on second-hand ships are an extension of a seaborne cargo market that's running full steam, spurring sales of new ships after years of declines and boosting charter activity to the strongest level in more than a decade.
Old is running hot
As a result, container ships are a fast-appreciating asset. A 10-year-old vessel able to move 6,600 steel boxes is fetching $41 million, according to data from Clarkson Research Services Ltd., a unit of the world's largest shipbroker. That's close to double the year-earlier level and compares with a low of $9.5 million back in 2016.
"The recent price increases have happened far more quickly than previous sales and purchase cycles," said Stephen Gordon, managing director at Clarkson Research. "Recent prices trends for 10-year-old vessels have more than doubled in less than six months, whereas in 2016-17 and 2004-2005 it took nearly 18 months for similar percentage price increases."
February was the second-highest activity on record for transactions measured in ship container capacity.
Global trade surged in the latter half of last year as COVID-19 saw people buying more goods because they couldn't spend as much on travel, entertainment or dining out. Typically there's a lull in the demand for products shipped across oceans after the Lunar New Year celebrated in Asia. But with travel restrictions still in place in many countries, that's kept air-cargo capacity tight, which in turn forces more freight on the high seas.