Jim Rogers is seriously concerned about the impact of continual and expansive monetary policy coordinated by central banks around the globe. We have even seen the Chinese central bank conduct an “Unofficial Economic Stimulus” in the past two months.
The monetary policies of central banks are currently supporting the shipping industry, enabling shipowners to realize improved rates and higher values on vessels. Whether it is Quantitative Easing (“QE”) by the U.S. Federal Reserve or the stealth “Unofficial Economic Stimulus” by the Chinese central bank, the shipping industry has become dependent upon liquidity being injected into the economic/financial system to survive.
The economic data was so bad, the Chinese central bank felt required to act.
In fact the latest round done by China to stimulate the further development of “Ghost Cities” and “Ghost Infrastructure Projects” was critical to the short-term revival in dry bulk shipping rates.
We expect the impact to be short-lived and shipping rates will again begin to trend lower in short order. In the meantime, the number of dry bulk ships that continue to be delivered is substantive. The only thing an economic stimulus really does for shipping is delay scrappings and potentially reduces slow steaming (note: two material negative impacts on shipping rates).
Shipping is not immune when the “Sea of Money Ends.” The problem is shipowners will have built excess fleet capacity causing valuations to be destroyed and financial institutions that have not de-levered, will have significant problems holding shipping assets.
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April 9, 2025
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