Shipping companies make the most of rising freight rates, posting record profits
The new reality is full of supply cuts caused by conflicts such as the ones in Ukraine and Iran. But at the same time it has become a more profitable industry
The war in Iran has caused an earthquake in global maritime transportation, with the epicenter located in Hormuz. The blockage of this strait has forced ships to take longer routes and reduced the number of available vessels, while the insecurity caused by Iranian strikes is being passed on through soaring costs to transport goods and, above all, energy. Average earnings in maritime shipping grew 75% from last year, and remained 92% above the average of the last 10 years. It is a juicy business that’s controlled by just a few companies that dominate the market. Those that are publicly listed have seen their share value more than double.
The maritime shipping industry has been adapting to a more volatile market ever since the Covid pandemic. The new reality is full of supply cuts caused by conflicts such as the ones in Ukraine and Iran, as well as port congestion. But at the same time it has become a more profitable industry. “Ever since Covid, the way of fixing prices in maritime shipping has changed radically. There is a natural minimum in the price. You can make a lot more than you used to,” said Vincent Clerc, executive director of the Danish shipping company Maersk, in September. His company has the second largest container carrier fleet in the world, with a market share of 13.6%. In the second quarter, the company reported attributable net income of $1.3 billion, up 116% year-over-year, and raised its 2026 guidance for the second time this year. Analysts at Citi expect to see even higher figures for the third quarter on November 5. Maersk shares rose 60% this year.
But it is in the oil sector that the soaring prices are most noticeable. The cost of shipping petroleum from one place to another has multiplied tenfold so far this year. And this is fattening up the profits of the shipping companies that operate oil tankers. The fee for transporting two million barrels of oil in a VLCC ship from West Africa to China was in excess of $770,000 a day in mid-October, and $600,000 a day for the Gulf of Mexico-China route. “The shipowner still has to pay the crew, for maintenance, food, with the remaining amount. This is estimated at around $10,000 a day,” explains John Ollett, of the Argus consultancy. The substantial remaining margin is what’s driving up corporate profits. A modest exchange-trade fund (ETF), the Breakwave Tanker Shipping ETF, has become the great financial exponent of this trend. This investment tool reflects the daily price movements of indices that track the future cost of transporting crude oil, and this year it has soared an unbelievable 4,750%.
Frontline, the world’s fifth largest oil tanker shipping company with a fleet of 38 VLCC supertankers —which can carry two million barrels— plus 19 Suezmax (which can cross the Suez Canal) and 18 smaller Aframax tankers, has soared 170% on the stock exchange this year, and in the second quarter it reported profits of $659.2 million. DHT Holdings, another Norwegian company, achieved record profits of $198.3 million.
The global fever for oil shipping has also led Trafigura, the second‑largest oil trader in the world, to take its supertanker division public. Called Volare Shipping, so far it has gotten off to a discreet start at the Oslo Stock Exchange.
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