Commodity shipping stocks outperform the Dow transportation average

The Dow Jones Transportation Average has fallen 11% since late March on fears of a slowdown in domestic demand. Container shipping inventories were pulled down along with domestic transport.

Not so with commodity mail order stocks, which have very different drivers. Tanker, gas transport and dry bulk shipping stocks are on the way up.

The charts of shipping stocks were awash with double-digit green numbers on Thursday, a day when the main indices were in the red.

Tsakos Energy Navigation (NYSE: TNP) and Teekay Tankers (NYSE: TNK) hit new 52-week highs on Thursday, as did bulk carrier owners Genco Shipping & Trading (NYSE: GNK) and Golden Ocean (NASDAQ: GOGL). , and Flex LNG (NYSE:FLNG).

Numerous other commodity shipping stocks — but not container stocks — are on the cusp of new one-year highs.

tanker inventories

The Dow Transportation Average (DJTA) is down 10% year-to-date (YTD).

In contrast, shares of product tanker owner Scorpio Tankers (NYSE: STNG) are up 77% year-to-date. Tsakos Energy Navigation shares are up 68%. Nordic American Tankers (NYSE:NAT) is up 60%, Teekay Tankers is up 57%, Euronav (NYSE:EURN) is up 42% and International Seaways (NYSE:INSW) is up 41%.

All Koyfin stock charts

Tanker spot rates have finally recovered over the past few weeks. Clarkson’s Platou Securities put prices for modern-build Suezmax crude oil tankers (with a capacity of 1 million barrels) at $45,300 a day, up 163% from the previous month. Modernly built product tankers of the MR class (25,000-54,999 deadweight tons) were the top performers, earning US$52,400 per day.

LNG stocks

The war between Russia and Ukraine has had a positive impact on shares in companies that transport, produce and regasify LNG. Sentiment is that Russian pipeline volumes will be replaced by ocean freight volumes over time, which despite lower average voyage distance is net positive for shipping demand as more US LNG goes to Europe rather than Asia.

Flex LNG shares are up 36% year-to-date, while GasLog Partners (NYSE: GLOP) shares are up 30%.

shipping stocks

Dry bulk goods

Dry bulk stocks fell in early April along with inland transport and container shipping stocks. They have since recovered, despite very weak rates for larger capesize bulkers (180,000 DWT) and moderate rates for smaller bulker categories. Genco is up 54% year-to-date. Eagle Bulk (NASDAQ:EGLE) is up 50%, Golden Ocean is up 47%, Star Bulk (NYSE:SBLK) is up 34%.

shipping stocks

container inventories

In contrast to other segments of maritime shipping, container stocks have fallen by double digits since the end of March.

They have been weighed down by the same consumer demand fears that are hitting the transportation index and have given back much of their year-to-date gains.

However, to put the recent decline in context, container shipping stocks have been the best performing shipping stocks since the outbreak of COVID. Just as an example, on Thursday, shares in container ship leasing company Danaos (NYSE: DAC) closed down 17% from their March 28 peak. But it was still 16 times higher than it was in pre-COVID January 2020.

Container ship charterers’ inventories have fallen recently despite several years of booking contract revenue at record prices for these companies, shielding them from current consumer demand. And while we have customers (the container lines) with record cash buffers, counterparty risk is negated.

Shares in shipping companies have fallen more than shares in ship rental companies. Zim (NYSE: ZIM) and Matson (NYSE: MATX) are down 6% and 3%, respectively, year-to-date. Not quite as bad as the Dow Jones transportation average, but close.

Airlines are exposed to near-term US consumer demand via spot rates. However, around half of their sales are covered by long-term contracts, which have already been largely negotiated at record levels for 2022. Additionally, spot rates are still extremely strong. Drewry puts current Shanghai-Los Angeles spot rates (excluding premiums) at double last year’s rates and five times 2020’s rates.

Chart: FreightWave’s SONAR (To learn more about FreightWave’s SONAR, click here.)

Container shipping companies reported the best quarter in their history in the fourth quarter of 2021. Depending on the airline, leading indicators for the first quarter of this year will either be a tight second quarter or another peak.

Chinese company Cosco recently announced that it expects net income of 27.6 billion yuan ($4.3 billion) for the first quarter of 2022.

That’s up 79% from the first quarter of last year and not far short of the record 30.5 billion yuan achieved in the fourth quarter of 2021.

Taiwan-based Evergreen reported monthly operating income through the end of March. Operating income for the first quarter of 2022 hit an all-time high of 170.8 billion new Taiwan dollars, up 90% year-on-year and up 10% from the previous peak in the fourth quarter.

Chart: American Shipper based on data from Evergreen

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