Sea freight is undoubtedly the most active means of transportation for shipping and cargo across continents. It is estimated that 90% of the world’s traded goods are carried by sea.
Shipping by sea includes a huge logistics network, and there is a huge number of companies involved in transporting more than 11 tons of goods across the sea every year. The sea freight industry is huge by market capitalization, with the top five companies totaling more than 200 billion USD market cap.
These companies’ stocks experienced a massive shock during the Covid-19 pandemic in 2020 when countries locked themselves to curb the spread. The influence of the pandemic had a wide magnitude on the shipping industry because it came right after the oil price war, and the US ban on Chinese tankers.
After the first shock of the pandemic, the industry recovered, and shipping stocks returned to pre-pandemic levels, only to get hit again by labor crisis and container shortage.
Shipping companies of all types; dry bulk – tankers – and container leasing companies, experienced a roller coaster of events driving their stock price to dramatically fluctuate up and down.
In the following, we will shed some light on the most important shipping stocks, and track their performance during the pandemic over 2020 and 2021. We will also draw some estimations for the upcoming events in 2022.
Shipping industry facts
The longest shipping route
From southern Pakistan to northern Russia, which is estimated for 32,000 km.
The busiest shipping route
The English Channel. +600 ships pass daily between the North Sea and the Atlantic Ocean.
The largest sea shipping companies
Mediterranean Shipping Company – 645 ships; Total TEU – 4,284,668; Market share – 16.9%
Maersk – 738 ships; Total TEU – 4,282,302; Market share – 16.9%
CMA CGM – 566 ships; Total TEU – 3,167,522; Market share – 12.5%
COSCO – 498 ships; Total TEU – 2,943,120; Market share – 12.3%
2020: The Panic – Fall of Dry Bulk and Container Stocks
During the first quarter of 2020, when the World Health Organization declared the pandemic, the global trade structure took a massive shock and the shipping industry was not an exclusion.
Countries closed their borders trying to isolate themselves from the virus and halted imports from Asian countries, which changed the demand for shipping vessels. Additionally, restrictions on workplaces were imposed, causing workforce reduction and production shortage, which also factored in the stock price fall of most shipping companies around the world.
This also affected container leasing. As the global trade was reduced between countries, the demand for freight containers dropped, causing the container prices to plunge and pulling the container lessors’ stock prices to fall.
The initial shock took over major shipping stocks, including dry bulk vessels, tanker ship companies, and container lessors.
Dry bulk stocks
Dry bulk stocks did not only suffer from the reduced trade volume between countries, but they also experienced rate devaluation.
Rates for charters and vessels dropped, the market value of commodities shipped as dry bulk also dropped as global demand was reduced, and several vessels companies suffered financial losses and eventually filed for bankruptcy.
Star Bulk Carriers corporation
Star Bulk corporation lost more than 30% of its stock price within the first month of 2020. In January alone, the stock price dropped from around $12 per share to $8 by the end of the month.
The stock price drop worsened in May when it continued falling to $3 per share, recording a decline of 75% compared to the stock price at the beginning of the year, and a 50% drop compared to the previous month.
Later, towards the end of the first half, the stock price recovered and jumped from $3 to more than $6 per share. This increase came after governments absorbed the initial shock of the pandemic, and imposed clear working guidelines for the workforce.
Golden Ocean Group
The same impact was for other dry bulk carriers. Golden Ocean Group Ltd stock price went down from $5.80 to $2.80 during the first quarter of 2020, recording a drop of 51% as a response to the pandemic announcement.
The stock later recovered around 40% of its value as it grew from $2.80 to $4 by the end of the first half.
Genco Shipping & trading
The company faced a similar scenario when it lost 60% of its stock price, falling from $10.50 to $4.50 between January and March. However, by the end of June, the stock price rose to $6, recovering around 20% of its initial stock price at the beginning of the year.
Container leasing stocks
The supply and demand of containers is a crisis that still persists until 2022, which was created by the impact of the Covid-19 pandemic and the associated restrictions.
During the first shock of the pandemic, international trade shrank and the demand for containers dropped down as well as prices. However, after a few months when countries saw that trade in inevitable and industries recovered, the container supply crisis was created.
When Asia was deep into the crisis with a very strict lockdown, North America was still functioning regularly. Ports in China had no workers to pick up containers and prepare them, while shippers in the US were waiting for containers to return for more than 6 months.
This parity in the supply and demand changed several times throughout the pandemic, and we will take a look at top container lessors, and how they suffered from these events.
Danaos Corporation is a leading company in charter vessels and containerships, which has suffered from the sinking demand for containers during the first quarter of 2020 when the pandemic was announced, and international trade dropped.
The stock price dropped from $12 to $5 between January and March, recording a decline of more than 55% in the stock price. The fall continued through the second quarter when in May the stock price took another hit and fell to almost $3.50 per share, recording another 30% drop in the stock price.
Before the end of the first half of 2020, the stock price recovered slightly, climbing up to $6-$7. This improvement was influenced by the industrial recovery when countries started gradually resuming trade for some products.
The company’s stock price was on a free fall during the first quarter of 2020, falling from $10.50 to $3.50 per share, recording a massive 66% stock price loss. Towards the end of the 1st half, the stock price rose slightly to $5, gaining back around 40% of its stock price.
Global Ship Lease Inc.
Leasing ships have dropped as well in the light of dropping demand for containers and for shipping in general. Global Ship Lease Inc. suffered from the falling stock price, going down from $9 in January to $2.70 in March is a significant loss of 70% for the share price.
Despite the overall recovery in mid-2020, the company recovered a poor +2$ on its stock price, gaining back only 15% of its initial stock value.
Tanker ships are majorly used for transporting crude oil, refined oil, and petroleum products, which means that the price of the tanker ships is highly associated with the global oil price.
During the pandemic and especially in the first quarter of 2020, the world halted operations and the consumption of fuel was reduced, causing major price declines in the price of fuel around the world.
This led to less demand for oil transportation and less demand for tanker ships. However, tankers that were already filled and shipped, were faced with long queues at ports with a lower workforce due to the pandemic, which made it hard for exporters to find empty tankers.
This oil and tanker ships crisis led to a huge stock confusion for these tanker ship corporations.
Scorpio Tankers Inc.
Scorpio Tankers owns the largest LR2 tankers fleet around the world, which can carry deadweight up to 115,000 tons. The company is a major petroleum transporter, which means that the demand for its services is highly associated with the oil price and oil global demand.
The company’s stock price saw a steep slope as soon as the pandemic was announced within the first quarter of 2020. The stock price went from $40 to $13 in three months, recording a fall of more than 67%.
Later, when the world got over the first Covid-19 panic, the shipping industry recovered a bit and the stock price increased slightly, climbing from $13 to $26. However, it quickly rolled back to $12 towards the end of the first half of 2020.
The decline extended to most of the shipping companies that operate oil transportation and tanker shipping.
DHT Holdings is a provider for refined oil transportation in different carrier types such as VLCC, Aframax, and Suezmax segments. The stock price for DHT declined from $8.50 in January to $5 in March, plotting a more than 40% devaluation.
However, in April, the stock price soared by another 40%, jumping up to pre-covid levels at $8.50, as a response to the dramatic price decline when the oil price went below zero. Then, the demand for large tankers increased to store the oil, and DHT’s VLCC carriers became highly demanded to store the oil offshore.
Soon after that, the stock price fell again to $5.50 towards the end of June 2020, losing 35% of its value.
The fourth-largest tanker shipping company experienced a similar decline. The stock price dropped by more than 50% between January and March of 2020, as the price went from $13 to $6.30 per share.
Despite several recovery attempts in April when the stock price rose to $10, nearing its pre-pandemic levels, the stock price ended the first half of 2020 at around $6 and $7 per share.
Here are some other significant drops in stock prices that happened during the pandemic.
Euronav: stock price falling from $13 to $8.30 (-36%)
International Seaways Inc: stock price falling from $30 to $16.30 (-45%)
Teekay Tankers Ltd: stock price falling from $24.50 to $13 (-46.9%)
Nordic American Tankers Ltd: stock price falling from $5 to $4 (-20%)
H2 2020 – Upswing of Container Stocks
The second half of 2020 witnessed a dramatic increase in the price of shipping containers, and in the value of container lessors’ stock prices because there was a global shortage of empty containers.
Container vessels were piled at ports, especially at those with reduced labor, which rendered the supply of empty containers very low. Shippers were ready to pay 10x times more to return a container.
When different countries had different restrictions related to Covid-19, production was boosted in the US, and companies increased their imports to increase their storage. On the other side, East Asian countries were suffering from the pandemic casualties, and the workforce was reduced, which slowed the process of emptying the in-house containers.
This shortage in container supply caused the leasing price of containers to increase 10 times more than the price one month earlier, and we see the massive fluctuation in the following containership stocks.
The company experienced a huge stock devaluation from $12 to $3.50 during the first half of 2020, but it achieved an impressive rebound through the second half of the year.
The stock price started growing in August 2020, where the stock grew by 40%. However, the growth did not stop, and ended the year at $21 per share, achieving a stock price growth of almost 500%.
Global Ship Lease Ltd
After losing around 70% of the stock price value during the first half of 2020, GSL managed to rebound and achieve a 166% stock growth, pushing the stock price from $4.50 to $12 by the end of 2020.
The company leads in shipping sea cargo in different segments like dry bulk, tankers, and containerships. The stock price was fluctuating pretty much between $1.50 and $2.50 during the first half of 2020.
However, as the demand for containers and tankers increased in the second half of the year, the stock price surged by more than 115%, and the stock price went from $2.50 to around $5.40.
Matson Incorporation provides transportation across continents from the Americas to the Far East. The stock price during the second half of 2020 jumped from $29 in June to $57 in December.
Matson was able to achieve stock price growth of more than 95% during the second half of 2020.
CMRE stock price recovered after a great fall in the first half of 2020. Costamare’s stock grew from $5 to $8.30 per share between June and December 2020, achieving a growth of more than 60% in six months.
Q1 – Q3 2021 – Industrial recovery, but not for tankers
In 2021, most restrictions were relaxed around the world. The majority of countries got over the crucial stage of Covid-19 spread, and international trade patterns resumed. Hence, production levels increased and the demand for carriers increased.
However, the demand for crude oil remained at low levels, which did not help the oil prices to recover after the initial shock. Therefore, the oil price was growing at a very slow rate. Besides that, the rate for oil tankers kept decreasing, and as a result, the stock price for tanker ships corporations kept falling.
In the summer of 2021, when the Delta variant of Covid-19 emerged, countries re-imposed some restrictions on movement and workforce, which caused most shipping companies’ stock to decline further.
Dry Bulk Shipping
Star Bulk Carriers corporation
After a huge stock growth during the first half of 2021 from $8.80 to $24, recording a +170% uptick in the stock price, the growth slowed down during the second half of the year.
The stock price started falling during the summer between June and July when the company’s stock lost around 30% of its value, falling from $24 to $17 per share. However, the stock price started fluctuating from around $20 until the end of the year when the stock was valued at $22.
Genco Shipping & trading
During the first half of 2021, the stock price grew around 150%, from $7.5 to $18.80 between January and June. However, this growth slowed down, and the stock price dropped to $16 by the end of the year.
Eagle Bulk Shipping Inc.: stock price $36 (Q1) to $50 (Q3): +38%
Safe Bulkers Inc.: stock price $2.45 (Q1) to $5 (Q3): +104%
Container Leasing stocks
The high demand for containers increased the stock price for more container leasing companies. In 2021, when the shipping industry resumed, it was natural to witness an increased demand for containers.
However, starting from the 3rd quarter, the crisis worsened as containers were hard to find, and the US ports were crowded with lines of ships waiting to be unloaded. This caused the demand for containers to increase, with the decreased supply, causing the container leasing stocks to increase.
Euroseas Ltd’s stock price increased from $10 in the 1st quarter to $35 in the 3rd quarter, recording an increase of +250% on its stock value. However, the price later dropped slightly to $24 by the end of the year.
Global Ship Lease Inc.
The stock price for GSL witnessed astonishing growth in January 2021, as it grew more than 40% during one week, then it dropped down to the previous level.
Then, between the first and the third quarters, the stock price jumped from $14 to $23, growing more than 60%.
The stock price of Atlas corporation faced the same experience, growing from $13 to $15 between the first three quarters of 2021, and achieving a stock price increase of 15%.
Costamare Inc.: stock price growing from $9.6 (Q1) to $15.50 (Q3): +61%
Danaos Corp.: stock price growing from $50 (Q1) to $82 (Q3): +64%
Nordic American Tankers limited
The stock price witnessed some recovery at the beginning of 2021, growing more than 25% per share during the first quarter. However, when the Delta variant emerged and the workforce was reduced again in most countries, the stock suffered again.
As a result of the resumed closure, NAT stock dropped more than 10% in one month, and in the end, the stock price lost more than 50% of its value between June and December 2021.
Internation Seaways Inc.
The stock price for INSW saw frequent fluctuations throughout the whole year of 2021, as the price was rising and falling around $20 per share. After the stock price increased by 17% during the first half, the stock price started falling and ended the year at $14.50 per share, recording a fall of more than 25%
ZIM Integrated Shipping Services Ltd
The Israeli cargo shipping company witnessed tremendous growth in 2021, and the company was able to double its year-to-year earnings. It managed to beat the experts’ expectations.
ZIM Integrated Shipping Services Ltd was expected to grow its earnings per share to $4.7 and revenue from sales to $1.6 billion. However, ZIM Ltd. managed to raise its EPS to $5.35, and sales revenue soared to $1.7 billion. Beating records of the company 75-years of operations.
A successful sales strategy and momentum investment boosted the stock growth of the company. When the EPS and sales improved, the stock price showed positive signs, and more investors showed interest, which caught the eye of more investors to catch the momentum of investing in ZIM Integrated Shipping Services Ltd.
In 2022, NASDAQ lists ZIM as a strong buy, and technical indicators show a 100% buy for the ZIM stock. Additionally, the company pays dividends of 14.58% yearly, which is considered high compared to top corporations around the world, pulling the attention of more investors.
Looking at the stock price movement of ZIM Integrated Shipping Services Ltd, the stock price grew from $12 to $50 throughout the 3rd quarter of 2021, achieving growth of more than 300%, and later ended the year at $58.80 per share.
In 2022, and during the first quarter, the stock continued its growth reaching $72 by the end of March 2022, and recoding +24% growth in the first quarter of 2022.