Sailing into Recovery

As we prepare for the 15th Annual Capital Link International Shipping Forum this coming week, it is worth reflecting on the apt them, “Sailing into Recovery.” While this has certainly been true for the stocks, which have enjoyed a resounding run of returns since late-2020, many of the key segments have already been improving and the equities are simply catching up to the reality of better markets.

I have included an excerpt below which includes a synopsis of some of my latest segment commentary. I will be sharing additional views during the analysts’ panel on March 3rd. I invite readers to join me at the Capital Link Forum this week and I look forward to a continued theme of “Sailing into Recovery.”

Optimism Returns to Shipping

We have finally seen some optimism return to the shipping sector in recent months, with this optimism backstopped by strong cash flows and improving demand signals across many key segments. The most notable strength is present for containerships, where tight supply and robust demand are driving leasing rates to fresh 13-year highs. Global liners clamoring to secure tonnage at almost any price for the next 2-3 years since much needed newbuild orders will not arrive until 2023 or 2024. The dry bulk sector is also showing signs of recovery after nearly a decade in the doldrums. Gas markets are bumpy, but there is no denying the long-term secular growth. Finally, although the tanker sector looks to remain challenged during 2021, there are some signs of optimism into late-2021 if enough ships are demolished in the interim. Future environmental regulations remain the wildcard and make up a large portion of my macro focus.

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