Drewry Maritime Financial Insight October 2020

Container shipping:Well-coordinated capacity management ensured that all major container carriers, with the exception of Yang Ming, were profitable during the second quarter despite weak volume growth. Yet, a disconnect between shipping rates and stock prices kept investors away. But the peak season surge in volumes and record jump in rates in the third quarter resulted in stocks recalibrating now, adjusting to the recovery. As a result, major companies, including Maersk and Hapag-Lloyd, have upgraded their full-year 2020 guidance by a few notches while credit rating agencies have revised their ratings upward.

Port and terminal operators:After witnessing higher volatility in 1H20, Drewrys port stock portfolio consolidated in 3Q20 with the companies under coverage generating an average return of 4% (vs -38% in 1Q20 and 14% in 2Q20). Even though central bankers and governments alike tried to uplift investor confidence, the looming threat of the second wave of COVID-19 infections and the upcoming US presidential election have led the equity market participants to opt-in for a more conservative approach. In 3Q20, the port sector throughput index rebounded for the third consecutive month.

Dry bulk shipping: We believe charter rates for Dry Bulk vessels may seem some improvement in the coming months. Expanding manufacturing activity in China, which can be seen by the manufacturing Purchasing Managers Index staying at around 51 points in 3Q20 shows coupled with the latest economic pla....

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