Port congestion due to Asia’s Covid-19 lockdowns may further hike container ship rates in a red-hot market that has already pushed earnings off the charts, Global Ship Lease (GSL) executives told analysts.

The New York-listed boxship lessor’s chief commercial officer, Thomas Lister, said the high freight rates may get even better once China lifts its lockdown on Shanghai.

“The more pent up demand that you have building up in China while the ports and or the production facilities themselves are effectively closed, the bigger the demand-side shock when it comes back online, and the greater the sudden additional tightening in the supply-demand balance,” he told analysts during the company’s earnings call.

“For sure, we see potential for the sustaining of these rates or possibly even increase of those rates when that eventually happens.

“And the longer it takes to happen, clearly the greater the impact.”

He said shipping has regarded the supply chain congestion as “transitory” for about the last 18 months, but it still persists due to Covid-19 and high consumer demand.

“At least from where we’re sitting, we don’t see that congestion being structurally resolved anytime soon,” he said.

His bullish comments came after the New York-listed boxship owner on Monday posted a first-quarter profit of $70.2m, which exceeded the earnings in the same period of 2021 by nearly 17 times, thanks mostly to earning high charter rates with a larger fleet.

That came as the tonnage provider’s customers continue to reel in high right rates.

The Freightos Baltic Index’s daily average freight rate for the benchmark Asia-to-North America route went from about $14,000 per 40-foot equivalent unit (feu) in January 2020 to a high of almost $19,500 per feu in September 2021.

It has since cooled down in recent weeks, reaching $12,104 per feu on Monday, but that is still well above average rates that stayed below $2,000 per feu for the three years leading up to January 2020.

But the higher rates also mean higher prices for vessels, so GSL is holding back on acquiring more ships after adding 22 vessels in 2021, executive chairman George Youroukos said.

“We look at the opportunities continuously, but as you have seen, we have not executed any of them because we feel that the level of accretion that we want has not been in any of these transactions,” he said during the call.

“As time goes by, we expect more and more opportunities to make sense going forward. If rates subside at the point, which they will because it’s a cyclical market, that will be reflected on the rates and the opportunities.”