Shipping Stock Investment Guide: From Market Status to Stock Selection Strategies

Why Are Shipping Stocks Worth Paying Attention To?

Shipping companies control the lifeblood of global trade. According to statistics, over 80% of cross-border trade volume worldwide is completed via maritime shipping annually, and the performance of shipping stocks directly reflects the health of the global economy. In times of booming international trade, these companies often see the most rapid gains, but during economic downturns, they are also the most vulnerable to heavy losses.

As an investor, understanding the operational logic of shipping stocks is equivalent to grasping a macroeconomic thermometer.

The Last Decade of Shipping Stocks: From Prosperity to Difficulties

The past ten-plus years of shipping stocks resemble a blockbuster film—full of ups and downs, dazzling viewers.

Early 2010s Recovery: After 2010, global trade activity rebounded, leading to a surge in shipping stocks. However, this good run was short-lived. By 2015-2016, due to global economic slowdown and overcapacity issues, shipping stocks collectively declined.

2020 Black Swan Impact: The COVID-19 pandemic severely hit the shipping industry, pushing many leading shipping companies to the brink of bankruptcy. As vaccines were rolled out and containment measures eased, the global economy recovered rapidly, resulting in a revenge rally for shipping stocks.

2022 to Present Correction: After reaching a peak in 2022, shipping stocks entered a deep correction. Take Maersk, the world’s largest shipping company, for example: its stock price peaked in early 2022 and has since fallen by 60%. German shipping giant Hapag-Lloyd AG’s market value has also retraced nearly 70% from its late 2022 high.

What does this intense volatility reflect? The answer lies in the financial performance data.

Maersk’s quarterly revenue dropped from $22.767 billion in Q2 2022 to less than $13 billion in Q2 2023, a decline of over 40%. Even more concerning is the profit data—net profit plummeted from $8.879 billion to $1.453 billion, an 83% decrease. Such performance downturns inevitably show up in stock prices.

Global Shipping Stock Market: Major Targets Overview

For retail investors, choosing shipping stocks listed on exchanges is more convenient. Here are the main global shipping stocks (as of May 2024):

The Big Three US Shipping Stocks

Maersk (AMKBY): Founded in 1904, this Danish century-old enterprise is the undisputed leader in the global shipping industry. Operating in 130 countries, it transports goods valued at approximately $675 billion annually and employs 76,000 staff. Its massive capacity (4.18 million TEU) provides strong resilience even during industry downturns.

Hapag-Lloyd (HPGLY): Established in 1970, this German shipping giant operates at around 600 ports worldwide. Compared to Maersk, it is slightly smaller (capacity of 1.80 million TEU) but holds significant influence on European routes.

Orient Overseas (OROVY): Founded in 1947 by Chinese businessman Tung Hsiao-yun, this company has witnessed Hong Kong’s shipping industry growth. With over 150 vessels and a fleet exceeding 10 million tons, it ranks among the world’s top seven shipping companies. Notably, China COSCO Shipping Corporation acquired it in 2017, but its stock remains publicly traded.

Taiwan Stock Shipping Giants

Evergreen (2603): The absolute leader in Taiwan’s shipping industry, mainly operating routes connecting the Far East with the Americas, Northern Europe, and the Mediterranean. Its fleet of over 200 container ships and capacity of 1.67 million TEU make it one of the most important shipping stocks in the Asia-Pacific region. With a market cap of NT$365 billion, its significance in Taiwan’s stock market is evident.

Yang Ming (2609): Founded in 1972, this Taiwan-based shipping company serves over 70 countries across 170 ports worldwide. Compared to Evergreen, it is smaller (capacity of 705,614 TEU), but as an important representative of Taiwan shipping stocks, its value should not be underestimated.

The Future of Shipping Stocks: Risks and Opportunities Coexist

The factors influencing the future trend of shipping stocks are complex and variable. Here is a detailed analysis:

Economic Recovery Benefits: The Federal Reserve has raised the federal funds rate to 5.50% to combat inflation. As inflation data stabilizes, a rate cut cycle will gradually begin. This will inject new vitality into the global economy and stimulate international trade growth, benefiting shipping stocks.

Supply Chain Restructuring: Western countries are promoting manufacturing localization and nearshoring, with many supply chains moving out of China. This poses a threat to shipping stocks heavily reliant on Far East-Europe routes (like Evergreen and Yang Ming), but has less impact on companies like Maersk with more globalized route networks.

Geopolitical Uncertainty: The ongoing Russia-Ukraine conflict and escalating Middle East tensions are putting upward pressure on oil prices. Since fuel costs are the largest expense for shipping companies, rising oil prices will directly erode profit margins.

Environmental Regulations and Cost Pressures: Stricter global carbon emission regulations require shipping companies to invest heavily in fleet upgrades to meet environmental standards. Larger shipping stocks (like Maersk and Hapag-Lloyd) can leverage economies of scale to reduce greening costs, but small and medium-sized companies face heavier burdens.

Investment Strategies for Shipping Stocks

Based on the above analysis, investors should follow these principles:

Prioritize large-cap shipping stocks. Companies with a market cap over $10 billion tend to be more resilient during economic downturns and can leverage scale advantages to spread costs. Maersk, Hapag-Lloyd, and Orient Overseas all meet this criterion.

Avoid stocks overly concentrated on Far East-Europe routes. In the context of accelerating decoupling of US-China supply chains, Evergreen and Yang Ming’s route characteristics pose additional risks, despite their quality.

Pay attention to fleet age. Newer ships have advantages in environmental compliance and will incur lower retrofit costs in the future. This is an important indicator of long-term competitiveness.

Adopt a cyclical investment approach. The macro nature of shipping stocks means they are highly cyclical. Investors should accumulate positions at the bottom of large cycles, hold long-term, and gradually reduce holdings near cycle peaks to realize cyclical trading profits.

Conclusion

Shipping stocks are classic macroeconomic investment assets, reflecting the pulse of global trade. Currently, they face a complex macro environment—benefiting from economic recovery and rate cuts, but also challenged by supply chain adjustments and geopolitical risks.

For patient long-term investors, shipping stocks may offer good allocation opportunities during major cycle adjustments. However, the key is to select large, diversified route stocks and be prepared for long-term holding.