Ongoing geopolitical tensions in the Middle East are keeping freight rates and vessel prices elevated across the global shipping market, drawing growing interest from long-term institutional investors. Asset managers report a notable rise in demand from pension funds and large institutions for hard-asset allocations, with shipping assets emerging as a key focus.
Nicholas Thirogalas, chief executive of London-based shipping asset manager Tufton Investment Management, said that in meetings with investors over the past two quarters, all participants increased their stakes in the firm. Andreas Povlsen, head of maritime at private credit provider Hayfin, noted that investors now recognise shipping as a cash-generating hard asset closely tied to global trade, with some capital that previously targeted aviation and real estate shifting into the sector. Hayfin is currently raising a new maritime fund, aiming to double its previous $620 million target.
Another factor driving the renewed enthusiasm is that institutions are seeking hard assets with low depreciation rates, independent of the artificial intelligence boom. Although shipowners had earlier expected a wave of new vessel deliveries this year to trigger a cyclical downturn, the effective closure of the Strait of Hormuz and continued disruptions in the Red Sea have forced ships to reroute, extending voyage times and tightening capacity. Freight rates and asset prices across most shipping segments remain at or near historic highs. Industry executives expect this trend to continue if the Middle East conflict persists.
The tanker-focused exchange-traded fund Breakwave Tanker Shipping has seen its net value surge more than 23-fold this year. According to maritime data firm Veson Nautical, equity investments by US and UK institutions in listed shipping companies remain on par with last year, when that figure hit a 20-year high.
However, some market participants caution against risks. One shipping asset manager pointed out that institutional money is entering at current market peaks. While shipowners argue that post-war reconstruction and oil restocking demand will keep rates high, the downside risk may outweigh the upside potential. Thirogalas, meanwhile, remains bullish on the dry bulk market, saying it is "far from peaking."
Asset prices across vessel classes, particularly tankers, are approaching the record highs of 2008. Olivia Watkins, deputy director at Veson Nautical, said exceptionally strong charter market earnings are a key driver of rising vessel prices, allowing owners to recoup their purchase costs within a few years.
Asset managers are actively acquiring vessels. Hayfin has ordered seven product tankers and two LNG carriers this year. According to pricing agency Argus, JPMorgan Asset Management has ordered at least eight very large crude carriers, valued at around $1.26 billion in total, with options for two additional vessels.
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