High Shipping Costs Are Here to Stay, Says Bloomberg
By Henry Ren (Bloomberg) Stubbornly high shipping expenses for businesses are getting sealed into contracts for the next 12 months, forcing companies to pass the extra costs on to consumers....
The price gap between liquefied natural gas in Asia and Europe will support demand for shipping even as new vessels are built before fuel output expands, according to operator Hoegh LNG Holdings Ltd.
About 50 percent of the 87 new LNG carriers that will join the fleet of 365 by 2016 have secured charters, the Hamilton, Bermuda-based operator of seven tankers said in a report today. Global production will increase to 330 million metric tons by 2017 from 240 million tons in 2012, the company said, citing figures from BG Group Plc.
“Although some of the incremental transportation capacity could be available before the expected increase in LNG supply materializes, the long-term transportation market is expected to remain strong,” the company said. “The current price spread between the Atlantic and Pacific basin is expected to stimulate arbitrage and increased demand for transportation capacity in the near term.”
Even if some of Japan’s nuclear reactors restart, the energy will replace more expensive fuels before natural gas, leading to cheaper electricity and higher consumption, Hoegh said. Demand for natural gas is also increasing in South America because of lower domestic output and drier weather cutting hydroelectric power, according to the report.
– Isaac Arnsdorf, Copyright 2013 Bloomberg.
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