In the past, shipping stocks have taken investors by surprise. At the beginning of 2023, shares of oil tankers and product ships were doing very well. The plan was called a “supercycle” in the proposal. After COVID, the world’s demand for gasoline was on the rise. Sanctions against Russia were making trade paths longer, and the number of tanks in service was at a record low compared to the number of ships on order.
It was also expected that the dry bulk shares would go up. Both the dry bulk orderbook and the ship orderbook had few entries. The idea was that China would soon get over COVID, and as the year went on, it would need more dry bulk.
But the outlook for LPG transportation stocks was not good because several LPG carriers, which are special trucks used to move propane, were due to be delivered in 2023.
The way investors felt about container shipping stocks was much worse. Shipping costs have gone down a lot, and so has the cost of renting ships. A coming decline was thought to reduce demand in the future. With an orderbook-to-fleet ratio of 30%, there were going to be a lot of new ships on the market starting in March.
Shipping stocks in 2023 have been volatile. Container shipping has outperformed other sectors. Dry bulk stocks and ship stocks are underperforming.
Shipping stocks by sector vs. SPY
The Logistics and Trucking Industry news release announced the results of its study on Monday. The study looked at the 22 U.S.-listed stocks of shipowners with market capitalizations of at least $400 million based on the modified ending prices from the previous Friday through December 30, 2022. The study looked at how the major shipping sectors grew compared to the SPDR S&P 500 ETF Trust (NYSE: SPY), which is a popular way to invest in the global stock market. In January and February, shipping stocks did better than the market as a whole. In March, however, everything changed. Since March, shipping stocks haven’t done as well as the market as a whole, but the success of each area has been different.
So far this year, the 22 shipping stocks in the study have gained an average of 8%, which is less than half of what SPY has gained, which is 19%. The average stock price of a company that ships containers is up 21% so far this year, while the average stock price of a company that ships gas is up 18%. Tankers and dry bulk stores grew the most during the months of January and February. In the last 4.5 months, stocks in the container and gas transportation sectors have been more stable than stocks in the ship and dry bulk sectors.
Performance of Shipping Stocks in Various Sectors
Container shipping stocks have done well even though there is too much space and too much inventory of goods. There have been large changes in the adjusted ending prices of Danaos, Matson, Global Ship Lease, and Zim. Dorian LPG and Navigator Holdings are the U.S.-listed LPG carrier owners that have done the best so far this year. Their adjusted ending prices are up 43% and 12%, respectively. Flex LNG has been flat so far this year, and most of the owners of LNG shipping companies have taken them private. The owners of medium-sized tankers are still making money, but the owners of very large crude carriers (VLCCs) aren’t getting as much out of their ships as they used to.
The stock prices of Torm, Ardmore Shipping, and Scorpio ships have all dropped in the past few months because they own product ships. Shares of mixed-fleet companies like Costamare and Navios Partners went up in January and February, but then went down in March and April. This was in line with the overall shipping market. Current spot prices are 10% lower than their average over the past five years. This is a turning point for dry bulk stocks, which are very dependent on the Chinese economy.
Container shipping stocks have performed well. The container business has been gloomy due to overcapacity and excess inventory. The adjusted closing price of Danaos, a container-ship lessor, is up 29% year-to-date. The price of Matson, a niche ocean carrier based in Hawaii, is also up 29% year-to-date. Container shipping is the best-performing U.S.-listed sector this year, on average. The news is positive for the logistics industry. Container shipping companies are doing well despite market challenges.