Can you buy shipping stocks? The investment logic varies completely between different companies.

Shipping stocks’ performance over the past few years has been quite tumultuous. From the glory days of 2022 to now, when share prices have been cut in half, many are asking whether this sector still has investment value. Instead of obsessing over whether to buy or not, it’s better to first understand what kind of shipping stocks are worth getting into.

Core Logic for Selecting Shipping Stocks: Size and Route Distribution Determine Survival

In recent years, I’ve noticed an interesting phenomenon— not all shipping stocks are equally suffering. Take Maersk, the world’s largest shipping company, for example. After reaching a peak in early 2022, it has fallen about 60%. Meanwhile, Hapag-Lloyd, the second-largest global company, has declined nearly 70%. What’s the issue? Larger companies tend to have stronger resilience during economic downturns.

Why is that? Just look at their performance. Maersk’s mid-2022 quarterly profit was as high as $8.879 billion, but by Q2 2023, it dropped to only $1.453 billion, an 83% decline. However, because of its large base and the ability to spread costs across global routes, it can better withstand industry lows. In contrast, smaller shipping stocks are more vulnerable to operational difficulties under the same shocks.

Another key variable is route distribution. Currently, with escalating US-China trade tensions and Western efforts to de-Sinify supply chains— such as the US moving factories to Mexico and Europe localizing production— these factors hit companies heavily reliant on Far East-Americas/Europe routes hardest. Evergreen (2603) and Yang Ming (2609), as Taiwan-based shipping companies, have global operations, but these routes remain their mainstay, limiting future growth potential. Conversely, Maersk’s route distribution is more balanced, making it less affected by such shocks.

Key Investment Window for Shipping Stocks: Macroeconomic Cycles

Instead of chasing highs and selling lows, it’s better to grasp the economic cycle. The performance of shipping stocks is closely tied to global economic health— during boom times, trade is active and stocks rise; during recessions, trade shrinks and prices fall.

Currently, the Federal Reserve has raised the federal funds rate to 5.50% to curb inflation, directly suppressing US and global economic growth. But as inflation data gradually normalizes, the Fed is expected to start cutting rates, allowing the economy to recover. Once the rate-cutting cycle begins, global manufacturing and commodity demand will rebound, creating an opportunity window for shipping stocks.

Historically, after 2010, the shipping industry surged on the back of a global trade recovery, then experienced overcapacity and a sharp decline in 2015-2016, and a more severe downturn during the pandemic in 2020. But economic recovery post-pandemic has brought a strong rebound. The pattern is simple—buy in stages at the bottom of the long cycle and take profits near the top.

These Shipping Stocks Are Worth Watching

If you decide to invest in shipping stocks, these companies are worth understanding:

Maersk (AMKBY)
Founded in 1904, a century-old enterprise operating in 130 countries, with an annual cargo volume of about $675 billion, employing 76,000 staff, with a total container capacity of 4.182 million TEUs. Market cap is approximately $22.82 billion. Although listed in Denmark, it can be purchased via the US OTC market.

Hapag-Lloyd (HPGLY)
Founded in 1970, with operations in about 600 ports worldwide, serving 130 countries, with a capacity of 1.8017 million TEUs. Market cap around $27.06 billion. Listed in Frankfurt, also tradable on the US OTC market.

Orient Overseas (OROVY)
Founded by Chinese businessman Tung Hsiao-yun in 1947, entered container shipping in 1969. Owns over 150 vessels with a capacity exceeding 10 million tons, making it one of the world’s top seven shipping companies. Market cap about $10.16 billion. Acquired by COSCO Shipping, but its stock continues to trade.

Evergreen (2603) and Yang Ming (2609)
Taiwan’s leading shipping companies, established in 1971 and 1972 respectively. Evergreen owns over 200 container ships with a capacity of 1.685 million TEUs; Yang Ming handles 705,600 TEUs. Both are Taiwan stock market representatives, but as mentioned earlier, they rely heavily on Far East-Americas/Europe routes.

Additional Risks to Consider When Investing in Shipping Stocks

Beyond macroeconomic cycles, several variables can impact future performance.

Oil Price Fluctuations
The ongoing Russia-Ukraine war and Middle East conflicts create uncertainty in the international oil market. Rising oil prices directly increase fuel costs for shipping companies, which is a heavy burden for profit margins that are already tight.

Environmental Policies
Environmental issues are becoming more stringent. Future carbon emission restrictions will force the industry to adopt greener technologies and fuels, raising operating costs. Interestingly, there’s a divergence—large shipping companies can leverage their scale to retrofit fleets more cost-effectively, gaining a competitive edge over smaller firms. From this perspective, Maersk and Hapag-Lloyd, with their extensive fleets, are less impacted.

Fleet Age
When choosing shipping stocks, don’t overlook fleet age. Newer ships meet environmental standards more easily, reducing future compliance costs. This is another advantage of large companies—they have the capital to upgrade their fleets.

Practical Investment Tips

Based on the above analysis, here are some recommendations if you’re serious about investing in shipping stocks:

• Prioritize large companies. Firms with a market cap over $10 billion have greater resilience and are more likely to survive industry downturns.
• Avoid small-cap stocks. Smaller shipping stocks tend to be less able to withstand macro shocks.
• Be cautious of companies overly dependent on a single route. Especially those relying heavily on Far East-Americas/Europe routes, as US-China supply chain decoupling hits them hardest.
• Pay attention to fleet age structure. Choose stocks with relatively young fleets, which have lower environmental compliance costs.
• Time the cycle. Buy in stages near economic bottoms and consider taking profits near long-term peaks; avoid chasing rallies and selling in panic.

Shipping stocks are fundamentally cyclical assets. Those interested in this sector should be mentally prepared— they can surge or plunge significantly. But if you pick the right companies and enter at the right time, there’s still long-term opportunity.