How shipowners can navigate rising inflation

Should shipping be worried by the direction of many central banks? Splash Extra interviewed economists, brokers, financiers and owners on the risks of rising interest rates for August’s in-depth feature.

 

Rising inflation has been the focus of global policymakers in recent weeks as the rapid economic recovery has caused a mismatch between supply and demand while businesses try to rebuild their inventories and overcome supply chain hurdles that were caused by the pandemic.

 

Dagfinn Lunde, a regular Splash columnist and founder of eshipfinance.com, suggested owners had little to worry about rising interest rates.

 

“I only advise them to lock in the LIBOR just to be sure and avoid surprises in their projects,” Lunde told Splash Extra.

 

Tim Huxley, chairman of Hong Kong-based Mandarin Shipping, argued a little inflation might not be a bad thing as it historically helps asset prices.

 

Moreover, Huxley suggested higher interest rates might ease the flight to find investments that provide a yield and so perhaps stop the next round of private equity cash coming in, which will probably find its way to unwanted newbuildings.

 

Dr Roar Adland, professor of shipping at the Norwegian School of Economics, said that debt levels are so high, both in the private and public sector, that global economies simply cannot handle higher interest rates.

 

“For that reason, and due to the political will to keep kicking the can down the road forever through central bank intervention, I do not believe interest rates will rise meaningfully in the foreseeable future, and so shipowners have one less thing to worry about,” Adland maintained.

 

For the full article, including charts and the views of the International Monetary Fund, Affinity’s Richard Fulford-Smith, Clarkson’s Dr Martin Stopford and Khalid Hashim from Precious Shipping, subscribe today to Splash Extra.

How shipowners can navigate rising inflation