The repercussions of the war with Iran are no longer limited to oil and fuel prices, after the disruption of navigation in the Strait of Hormuz and the Red Sea led to an increase in shipping costs and the value of ships, and attracted new investors to the maritime sector, including pension funds that manage the savings of millions of employees.
According to a report by the Financial Times, major financial institutions have begun to view ships as long-lived investment assets, capable of providing regular income and maintaining their importance despite technological changes and the rise of artificial intelligence.
The equation begins when passage through the Strait of Hormuz or the Red Sea becomes risky, so ships are forced to wait or change their routes and take longer routes, which raises fuel consumption, insurance costs, and crew wages.
During long voyages, the ship is not available to carry other cargo, which effectively reduces the number of ships ready for operation, even without any of them stopping permanently. As the demand for transporting oil, gas, grains and commodities continues, companies compete for available ships, increasing shipping costs and the value of tankers to their owners and investors wishing to buy or finance them.
These shifts have prompted some pension funds to direct their investments towards ships, after traditionally focusing on long-term assets, such as real estate, roads and power plants. The corporation may buy a ship and lease it to a navigation company under a long contract, or finance its construction for a specific return, without directly undertaking its operation.
Investors believe that artificial intelligence may change the value of many companies and programs within years, but it will not eliminate the world’s need to transport oil, gas, and foodstuffs across the seas.
The investment company Haven is working to raise a new marine fund that may be twice the size of its previous fund, which amounted to $620 million. It also requested the construction of 7 tankers for petroleum products and two ships to transport liquefied natural gas.
JP Morgan Asset Management also requested the construction of 8 giant oil tankers, at a cost of approximately $1.26 billion, with the possibility of purchasing two additional tankers.
But rising profits do not come out of nowhere, as increased ship fares, insurance and fuel turn into an additional cost for companies, and then gradually move to the prices of food, energy and daily goods paid by the consumer.
Arab countries are directly affected by these transformations, whether through ports, shipping companies, oil refineries, or through the rising cost of imports. While Gulf companies and funds may benefit from owning ships, other sectors bear the bill for longer shipping routes.
This bet remains vulnerable to reversal, as the lull in the war and the return of normal navigation may lead to a rapid decline in shipping costs. The expansion of tanker construction could also lead to a surplus of ships exceeding the market need.
Thus, the ship turned from a means of transporting goods into a desirable financial asset, while longer trips increased its value in investors’ accounts, and at the same time increased the bill that reached the consumer.
