Shipping stock prices show obvious cyclical fluctuations. Are large shipping companies worth paying attention to?

The core function of the shipping industry is to connect the global supply chain through maritime transportation, responsible for delivering raw materials, semi-finished products, and finished goods worldwide. The smoothness of international trade directly determines the performance of shipping companies.

The Historical Cycles of Shipping Stock Prices

Over the past decade, the shipping sector has experienced multiple intense fluctuations. When the global economy expands and international trade is active, shipping stocks often enter an upward cycle; but when the economy stalls or uncertainties increase, freight demand sharply declines, and shipping stock prices fall accordingly.

Specifically, between 2015 and 2016, the shipping market plunged due to global economic weakness and overcapacity. In early 2020, at the outbreak of the pandemic, shipping companies faced bankruptcy threats, and stock prices took a heavy hit. However, as countries lifted restrictions and the global economy recovered, shipping stocks experienced a strong rebound.

Nevertheless, this rebound gradually lost momentum after 2022. Taking the world’s largest shipping company Maersk as an example, its stock peaked in early 2022, with a market value drop of up to 60%. The German shipping giant Hapag-Lloyd AG’s market value retraced nearly 70% from its high at the end of 2022.

The downward trend of shipping stock prices is closely related to deteriorating performance. Maersk’s quarterly revenue fell from a peak of $22.767 billion in 2022 to less than $13 billion in Q2 2023. During the same period, quarterly profit was halved from $8.879 billion to $1.453 billion, a decline of 83%.

Which Listed Shipping Stocks Are Available?

Among the top global shipping companies, many remain private, making it inaccessible for ordinary investors. However, in the US and Taiwan stock markets, several leading shipping stocks are available:

Maersk (AMKBY): Founded in 1904, a century-old Danish enterprise, traded via OTC in the US. Operating in 130 countries, with an annual transportation value of about $675 billion and a total container volume of 4.18 million TEUs.

Hapag-Lloyd (HPGLY): Established in 1970, also traded OTC in the US. Serving approximately 600 ports worldwide, with a capacity of 1.8 million TEUs.

Orient Overseas (OROVY): Founded in 1947, now part of China COSCO Shipping Corporation, owning over 150 vessels with a capacity exceeding 10 million tons, traded via OTC.

Evergreen (2603): Taiwan’s leading shipping company, with over 200 container ships, total capacity of 1.66 million TEUs, mainly operating routes from the Far East to the Americas, Northern Europe, and the Eastern Mediterranean.

Yang Ming (2609): A domestic Taiwanese shipping company, serving over 70 countries at 170 ports worldwide, with a handling capacity of over 700,000 TEUs.

The Future Direction of Shipping Stock Prices Depends on Multiple Factors

Positive Drivers from Economic Recovery: The Federal Reserve’s continued rate hikes have suppressed global economic expansion. As US inflation normalizes, the federal funds rate is expected to gradually decrease, giving the global economy a breather and boosting freight demand.

Dual Effects of Supply Chain Adjustments: Western economies accelerate localization and nearshoring, with many industries relocating from China to Mexico and other countries. This impacts shipping companies mainly operating routes from the Far East to North America and Europe, including Evergreen and Yang Ming, which will face challenges. Meanwhile, Maersk, with a more diversified route distribution, is less affected.

Uncertainty in Energy Costs: Geopolitical risks continue to rise, causing increased volatility in crude oil prices. The Russia-Ukraine war and Middle East tensions may push oil prices higher, eroding shipping companies’ profit margins.

Environmental Regulations and Competitive Differentiation: Stricter global carbon emission controls are forcing the shipping industry to green transformation. Large companies, benefiting from scale advantages, can meet environmental standards at lower costs, strengthening their market position; small and medium-sized shipping firms face greater cost pressures. Companies with newer fleets have a clear advantage in environmental compliance.

Practical Investment Tips for Shipping Stocks

Based on the above analysis, investors are advised to adopt the following strategies:

Prioritize Large Leaders: Shipping giants with a market cap over $10 billion have stronger risk resistance during industry downturns and can leverage scale to lower costs.

Avoid Small Shipping Stocks: The shipping sector is highly sensitive to macroeconomic changes; companies with small scale may struggle to survive economic cycles.

Be Cautious with Far East Route Specialists: Companies like Evergreen and Yang Ming, heavily reliant on Far East–Europe and Far East–America routes, face supply chain restructuring risks, limiting growth potential.

Focus on Fleet Age: Prefer companies with newer ships, which are better positioned to meet future environmental regulations and reduce compliance risks.

Capitalize on Cycle Lows: Shipping stocks exhibit clear cyclical patterns. Investors should build positions gradually at the bottom of the cycle and hold long-term, taking profits in stages at high points. Timing is more critical than stock selection.

Summary

The performance of shipping stocks is deeply influenced by macroeconomic conditions, requiring a long-term perspective. When selecting stocks, consider company size, risk resilience, and route diversification. In the context of ongoing geopolitical, energy, and environmental policy developments, large, globally diversified shipping companies are more attractive. Investors should closely monitor economic cycles and industry fundamentals, deploying capital during lows and patiently waiting for the next upward transition.