Shipping stocks have an extended tradition of defying expectations. Initially of 2023, sentiment was ebullient on crude tanker and product tanker shares. The word “supercycle” was bandied about. Global fuel demand was bouncing back from COVID, sanctions on Russia were inflating voyage distances, and the ratio of tanker tonnage on order to tonnage on the water was historically low.
Dry bulk shares were also expected to rise. As with tankers, the dry bulk orderbook was exceptionally slim. China would rebound quickly from COVID, the speculation went, ramping up dry bulk demand because the yr progressed.
On the negative side, a lot of liquefied petroleum gas (LPG) carriers — specialized tankers that carry propane — were poised for delivery in 2023, darkening sentiment on LPG shipping stocks because the yr began.
Sentiment on container shipping stocks was even worse. Freight rates and ship leasing rates were plunging. A predicted recession was set to curb future demand. The orderbook-to-fleet ratio was an ominous 30% and a tidal wave of newbuildings would hit the market starting in March.
So, over halfway through 2023, what actually happened to shipping stocks?
Container shipping has been the best-performing U.S.-listed sector yr thus far, on average. Gas shipping has been the second best. Tanker stocks are trailing behind containers and gas shipping, while dry bulk shares have performed the worst on average.
This will not be what was expected initially of the yr.
Shipping stocks by sector vs. SPY
FreightWaves analyzed adjusted closing prices (adjusted to account for dividends) from Dec. 30, 2022, through Monday of twenty-two U.S.-listed stocks of shipowners with market capitalizations of a minimum of $400 million. Firms with offshore interests were excluded, as were larger owners that listed after Jan. 1.
Performance of the most important shipping sectors (using a non-market-cap-weighted average of surveyed shipping shares in those sectors) was in comparison with the SPDR S&P 500 ETF Trust (NYSE: SPY), some of the popular vehicles to speculate within the broader equity market.
March marked a serious turning point for shipping stocks. In January and February, shipping stocks outperformed the broader market. Since March, shipping stocks on average have underperformed the market, albeit with different trends for various segments.
To look at the effect of the March turning point, shipping stocks were in comparison with SPY yr thus far (YTD) in addition to in January-February and March onwards. SPY’s percentage changes in these three time periods were virtually similar to changes in the typical of the three most important indexes — the S&P 500, Dow Jones Industrial Average and Nasdaq Composite — making SPY proxy for the broader market.
Shares of the 22 shipping stocks included within the evaluation are up a median of 8% YTD, lower than half the 19% YTD gain of SPY.
Container shipping stocks are up a median of 21%, edging out broader stock market gains. Gas shipping stocks are up a median of 18% YTD and tankers 9%. Mixed-fleet owners are down 2% and dry bulk owners are down 8% YTD.
Tankers and dry bulk stocks rose essentially the most in January and February, 32% and 30%, respectively. But additionally they fell essentially the most between March 1 and Monday, 18% and 29%, respectively, in a period when SPY rose 15%. Larger-cap container shipping and gas shipping stocks, on average, didn’t fall like tanker and dry bulk stocks did over the past 4 and a half months.
Container shipping stocks
The container shipping stocks have done surprisingly well given the gloom within the container business resulting from overcapacity and excess goods inventories.
The adjusted closing price of container-ship lessor Danaos (NYSE: DAC) is up 29% YTD, as is the worth of Hawaii-based area of interest ocean carrier Matson (NYSE: MATX). Container-ship lessor Global Ship Lease (NYSE: GSL) is up 24%. The outlier — and worst performer amongst U.S.-listed container shipping stocks — is Israel-based ocean carrier Zim (NYSE: ZIM). Its adjusted stock price (accounting for a big dividend payout) has suffered a 27% pullback since March. Zim shares are significantly underperforming the broader market YTD.
Liquefied gas shipping stocks
Listed gas shipowners include LPG carrier owners and liquefied natural gas carriers owners. The 2 U.S.-listed LPG carrier owners with market caps over $400 million are Dorian LPG (NYSE: LPG) and Navigator Holdings (NYSE: NVGS). Their adjusted closing prices are up 43% and 12% YTD, respectively.
Dorian, which owns very large gas carriers (VLGCs), is the best-performing U.S.-listed shipping stock YTD. Despite a big influx of VLGC newbuildings, high demand has pushed up VLGC spot rates to just about triple the trailing five-year average, in keeping with data from Clarksons.
Within the LNG shipping market, a lot of the previously listed owners have gone private. The adjusted share price of Flex LNG (NYSE: FLNG) is flat YTD, with January-February gains counterbalanced by declines since then. (One other large pure LNG carrier owner, Coolco, was not included within the survey since it listed on NYSE in March.)
Tanker shipping stocks
Tanker shipping stocks have been a particularly mixed bag. Stock performance has hinged on the sort of tankers which are owned. Shares of homeowners of mid-sized tankers are still doing thoroughly. Stocks of several owners of very large crude carriers (VLCCs) have given back earlier gains, but are still even to barely up on the yr. Shares of product tanker owners are down.
The massive three gainers YTD are Frontline (NYSE: FRO), Nordic American Tankers (NYSE: NAT) and Teekay Tankers (NYSE: TNK), up 39%, 32% and 29%, respectively — handily outperforming SPY despite pullbacks in recent months.
VLCC owners International Seaways (NYSE: INSW), DHT (NYSE: DHT) and Euronav (NYSE: EURN) have underperformed the broader market through mid-July.
The general tanker sector average has been pulled down by product tanker owners Torm (NASDAQ: TRMD), Ardmore Shipping (NYSE: ASC) and Scorpio Tankers (NYSE: STNG), whose shares have fallen significantly over recent months.
Scorpio is the worst performer among the many larger U.S.-listed shipping names. Its adjusted close on Monday was down 20% YTD.
Mixed-fleet stocks
Among the many larger mixed-fleet players, Costamare (NYSE: CMRE) owns container ships and bulkers, and Navios Partners (NYSE: NMM) owns container ships, tankers and bulkers. (Ship Finance International was not covered by the survey resulting from its offshore interests.)
Mixed-fleet shares followed the overall shipping trend: rising in January and February and pulling back since then. Costamare is up 9% YTD. Navios Partners is down 12%.
Dry bulk stocks
Dry bulk offers a very clear example of shipping’s March turning point, likely resulting from dry bulk’s high exposure to the Chinese economy. China’s post-COVID Chinese recovery has been much weaker than expected. Current dry bulk spot rates are down double digits from their five-year trailing average, in keeping with Clarksons data.
The 4 U.S.-listed pure dry bulk owners with market caps over $400 million all followed the identical pattern. Shares rose by double digits in the primary two months of the yr, then gave back those gains and more. All are underperforming SPY, although not by as much because the product-tanker subsector.
The adjusted close of Star Bulk (NYSE: SBLK) was down 4% YTD through Monday, with Genco (NYSE: GNK) down 8%, Eagle Bulk (NYSE: EGLE) down 9% and Golden Ocean (NASDAQ: GOGL) down 11%.
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