Maritime Shipping Stocks Investment Guide: Who is Worth Buying? How to Seize Future Opportunities?

Start by Looking at These Companies

Shipping stocks have experienced significant volatility in recent years. To decide whether to invest, you first need to understand the main market players. Currently, the major publicly listed shipping companies worldwide include Maersk (AMKBY), Hapag-Lloyd (HPGLY), Orient Overseas (OROVY), as well as Taiwan’s Evergreen (2603) and Yang Ming (2609).

In the current market environment, choosing shipping stocks requires extra caution. In mid-2022, Maersk’s quarterly profit reached as high as $8.879 billion, but by Q2 2023, it had fallen to $1.453 billion, an 83% decline. During the same period, revenue dropped from $22.767 billion to less than $13 billion. Such performance changes are directly reflected in stock prices—Maersk has fallen 60% since its peak in 2022, and Hapag-Lloyd has retreated nearly 70%.

Why Are Shipping Stocks So Volatile?

The shipping industry is extremely sensitive to the global economy. As the lifeblood of international trade, the performance of shipping companies is closely related to commodity flow and raw material transportation. When the global economy expands, international trade is active, freight demand rises, and shipping stocks tend to perform strongly; but during economic downturns or increased uncertainty, trade activity contracts, putting pressure on shipping stocks.

Over the past decade, shipping stocks have experienced several rounds of intense volatility. In 2020, the COVID pandemic dealt a heavy blow to the industry, with many leading companies facing bankruptcy threats. Subsequently, with vaccine rollout and easing restrictions, shipping stocks rebounded. However, this rebound came to an abrupt halt after 2022, with performance and stock prices declining in unison.

What Are the Core Factors Affecting Shipping Stocks?

Federal Reserve Policy Shift

In recent years, the Federal Reserve has raised the federal funds rate to 5.50%, suppressing global economic growth. As inflation normalizes, declining interest rates will stimulate economic recovery, which is positive for shipping stocks.

Changes in Supply Chain Patterns

Escalating US-China trade friction has accelerated the localization and nearshoring of supply chains in the West. This means traditional trans-Pacific and trans-Atlantic routes face contraction risks, limiting growth for companies like Evergreen and Yang Ming that heavily depend on these routes; meanwhile, companies with more balanced route distributions like Maersk are less affected.

Oil Prices and Cost Pressures

The Russia-Ukraine conflict and instability in the Middle East have driven up crude oil prices, directly eroding shipping companies’ profits. Rising fuel costs will be an unavoidable challenge in the future.

Environmental Compliance Costs

The shipping industry faces increasingly strict environmental regulations. Large companies can leverage economies of scale to achieve fleet “greening” at lower costs, gaining a competitive advantage; small and medium-sized enterprises face rising compliance costs.

How to Invest in Shipping Stocks Wisely?

Prioritize Leading Large-Cap Companies

Large shipping firms with a market cap over $10 billion, such as Maersk and Hapag-Lloyd, have stronger risk resistance. They can better spread costs during industry downturns and navigate cycles more easily.

Avoid Small and Mid-Cap Stocks

Small and medium-sized shipping companies are more vulnerable to macroeconomic fluctuations, with weaker resilience compared to industry leaders.

Be Cautious of Companies Overly Dependent on a Single Route

Given the US-China decoupling trend, avoid buying shipping stocks that rely heavily on trans-Pacific or trans-Atlantic routes. Long-term, growth potential for such companies is limited.

Focus on Fleet Modernity

Prioritize companies with newer fleets. New ships perform better in terms of environmental standards and fuel efficiency, reducing future compliance risks and operational costs.

Timing for Investing in Shipping Stocks

Overall, shipping stocks are cyclical assets. Investment strategies should revolve around economic cycles. The best timing is usually near the bottom of a long cycle, when company valuations are low and rebound potential is high. It is advisable to adopt a phased approach—gradually building positions and gradually taking profits near the cycle peaks.

This cyclical trading strategy is most effective for capturing the volatility of shipping stocks. Investors need to continuously monitor global economic trends, trade policies, and energy market dynamics to make timely decisions.