As 2023 draws to an in depth, the oft-predicted recession continues to be nowhere in sight and the S&P 500 index is flirting with a brand new all-time high. It was a powerful yr for ocean shipping stocks: They performed even higher than the broader market.
FreightWaves ranked 2023 shipping stock performance based on the change within the adjusted closing price (adjusted for dividends) on Wednesday versus the adjusted closing price on Dec. 30, 2022.
To place leads to context, U.S.-listed shipping stock performance was in comparison with the SPDR exchange-traded fund (ETF) that tracks the S&P 500 index (NYSE: SPY).
The ultimate tally shows some surprises at the highest.
Top 5 shipping stock gains of 2023
The winner, by an extended shot, is Connecticut-based Dorian LPG. Its adjusted share price surged 184% this yr. That’s greater than seven times the gain of the S&P 500 ETF.
Nobody would have predicted Dorian taking the crown originally of 2023. Dorian transports liquefied petroleum gas — propane and butane — in very large gas carriers (VLGCs). Sentiment on the VLGC sector was weak as this yr began, given the high variety of newbuildings due for delivery.
Strong demand ultimately trumped market headwinds from newbuildings. Panama Canal disruptions lengthened VLGC voyages, giving further support to identify rates. On Dec. 22, Dorian’s share price hit its highest level for the reason that company went public in 2014.
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Shares of tanker giant Frontline doubled this yr, rising 97%.
The corporate, founded by shipping tycoon John Fredriksen, is currently taking delivery of 24 very large crude carriers (VLCCs; tankers that carry 2 million barrels of oil) purchased from Euronav (NYSE: EURN) for $2.35 billion.
Consequently of this transaction, which can boost fleet capability by 58%, Frontline “will completely dwarf all publicly listed tanker competition,” said Pareto Securities analyst Eirik Haavaldsen in October.
OSG spun off its foreign-flag tankers into International Seaways (NYSE: INSW) after emerging from bankruptcy in 2014, leaving OSG with its Jones Act tankers and barges. (Jones Act vessels serve legally protected U.S. coastwise trades.)
OSG will not be a high-profile name in shipping equity circles. It has a small market cap ($383 million, in comparison with Frontline’s $4.46 billion) and limited analyst coverage. Yet its shares quietly rose 90% this yr, greater than some other U.S.-listed crude or products tanker company save Frontline.
Founded by Greece’s Aristides Pittas, Euroseas is a small player that had previously operated a mixed fleet of dry bulk ships and container vessels. Pittas split the fleet in 2018, hiving off the bulkers into Eurodry (NASDAQ: EDRY) and turning Euroseas right into a pure-play container-ship lessor.
Lease rates held up surprisingly well this yr despite a tidal wave of newbuilding deliveries. Euroseas’ adjusted share price rose 90%.
Stocks of virtually all container shipping lines have been under heavy pressure this yr as incremental capability from newbuilding deliveries outweighs transport demand. The worst performer amongst larger U.S.-listed shipping names across all vessel segments is Israeli liner company Zim (NYSE: ZIM). Zim’s adjusted share price is down 19% in 2023.
After which there’s Matson, whose share price is up 80%. Matson’s stock hit a brand new 52-week high on Dec. 22. Aside from March-April 2022, at the height of the availability chain crisis, Matson’s share price has never been higher.
“Unicorns do exist — just have a look at Matson,” said Stifel analyst Ben Nolan in October.
Matson’s market cap of $3.85 billion is greater than triple the market cap of Zim, despite the undeniable fact that Zim’s fleet capability is nine times higher. Matson operates in protected Jones Act trades, in addition to within the China-West Coast international trade, where it offers expedited service that competes with air cargo.
Restrictions on each the Panama and Suez canal routes are making Matson’s area of interest China-West Coast service much more attractive.
Tanker stocks
FreightWaves also analyzed 2023 shipping stock performance by vessel sector, calculating average sector performance on a market-cap-weighted basis.
Sentiment on tanker stocks was ebullient originally of 2023. There was even talk of a brand new “super cycle.” But only a couple of tanker stocks lived as much as those very lofty expectations. Share performance of householders of product tankers — vessels that carry gasoline, diesel, jet fuel and other refined products — has been particularly disappointing.
Beyond Frontline and OSG, the most important tanker share-price gains were posted by Teekay Tankers (NYSE: TNK), up 73%, and Nordic American Tankers (NYSE: NAT), up 61%. Each corporations own Suezmax tankers (with capability of 1 million barrels), a vessel category benefiting from reroutings as a result of the Russia-Ukraine war.
This yr’s smallest tanker-stock gains were posted by product-carrier owners Scorpio Tankers (NYSE: STNG), whose adjusted share price rose 17%, and Ardmore Tankers (NYSE: ASC), with a gain of just 7%.
Tanker shares overall rose 48% on a market-cap-weighted basis, almost double the S&P 500 ETF. Nonetheless, Frontline heavily skewed this average. Excluding Frontline, the remaining tanker owners’ shares rose 33% — not much higher than the broader market.
Container-ship lessor stocks
Firms that lease container vessels to shipping lines continued to report hefty profits this yr despite the top of the availability chain crisis and the normalization of freight rates.
These shipowners locked in most of their fleets on multi-year charters at the height of the COVID-era boom. That shielded this yr’s returns from downside. Moreover, liner corporations have surprised analysts and brokers by continuing to book latest charters at lease rates higher than pre-COVID levels, despite newbuilding deliveries.
Euroseas’ stock rose essentially the most, however it has the smallest market cap on this group, at just $223 million.
Greece’s Danaos Corporation (NYSE: DAC) is the biggest U.S.-listed player on this segment, with a market cap of $1.44 billion. Its share price rose 47% this yr, near double the gain of the S&P 500 ETF.
Greece’s Costamare (NYSE: CMRE) had the smallest gain, at 19%. This company also owns a big dry bulk fleet, and its share performance was likely lowered by exposure to that segment.
U.S.-listed container-ship lessors’ average stock gain was 37% in 2023, outpacing the broader market.
Dry bulk stocks
The dry bulk sector is more exposed to the Chinese economy than some other shipping segment.
China’s post-COVID recovery was much weaker than predicted. The country’s property sector — a significant driver of steel production and thus iron ore and coal imports — continued to deteriorate. Central government stimulus via infrastructure spending — a significant driver of dry bulk rates after the worldwide financial crisis — has been absent.
Spot rates for Capesizes (larger bulkers with capability of around 180,000 deadweight tons or DWT), unexpectedly surged within the fourth quarter of this yr. But basically, 2023 bulker rates have been disappointing.
In line with Jefferies, spot rates for Capesizes averaged $16,500 per day from Jan. 1 through Thursday, up only 2% versus the identical period last yr. Rate for Panamaxes (65,000-90,000 DWT) averaged 11,000 per day, down 43% yr on yr. Rates for Supramaxes (45,000-60,000 DWT) averaged $11,300 per day, down 49% yr on yr.
Rhode Island-based Pangaea Logistics (NASDAQ: PANL), an owner of midsize bulkers, is the best-performing U.S.-listed dry bulk stock of 2023, up 68% through Wednesday. Pangaea’s stock reached its highest level since 2014 on Thursday.
Greece’s Seanergy (NYSE: SHIP), which has a fleet of 17 Capesizes, got here in second, up 56%. Its stock hit a brand new 52-week high on Wednesday. (Seanergy’s share price has also been buoyed by stock purchases by shipping magnate George Economou, who has emerged as an activist investor in recent months.)
The yr’s worst performer amongst larger U.S.-listed bulker owners is Greece’s Diana Shipping (NYSE: DSX). Its adjusted closing price fell 14% in 2023.
Overall, U.S.-listed dry bulk stocks rose a median of 19% this yr, underperforming the S&P ETF gain of 26%.
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