Will 2009 Be the Year of the Bull for Shippers?

Shipping stocks have had a solid bounce from their November lows and seem to me to be ahead of many groups as well as the major market indices in their bottoming process. Just as this group signaled caution in global trade and transport mid year of 2008, it would make sense they may be one of the first to turn up in signaling an economic recovery somewhere out through the windshield, right?

First be appraised that shippers very much remain on investors' radar screens and awareness and willingness to bet on the constituents and the sole ETF is high. The explosive moves as well an increasing volume and confirming relative strength readings tell me this. Further, 3 key facts have been converging and moving in the same upward direction, albeit in vary speeds. Shipping equity values, Forward Freight Agreements (FFAs for short, a sort of futures market on shipping rates) and the Baltic Dry Index tells me to keep a close watch.

However Chinese New Year is early this and upon us – January 26th. 2008’s February New Year break led to the first sharp correction in the shippers we saw last year. Be cautious right now with the Ox approaching.

Comments

[PeteK:]

Mr. Zaro;
Happy Chinese New Year to you.
The year of the OX will mean strrong and sure-footed.
Same for ships, will mean Strong and sure Sailings.

Jan 25 07:00 PM

[Urbane Gori...:]

Re: "However Chinese New Year is early this and upon us – January 26th. 2008’s February New Year break led to the first sharp correction in the shippers we saw last year. Be cautious right now with the Ox approaching.".....

It's been suggested that the recent increase in dry bulk shipping is due to the Chinese iron and coal import run-up before their week off.

jegan

Jan 26 06:11 PM

[SoCalsurfbum:]

Your 3 paragraph commentary tells me you don't understand the industry and are just dipping your toe in... let me give you a hint... your evidence is wrong.

Shipping is driven by only 2 factors. 1) capacity utilization and 2) freight rates. That is it.

Right now there is a glut of capacity that cannot be fully utilized in the coming years so capacity utilization of the ships is way down. By the way they are reporting that 7% of global capacity has been anchored so far, which the companies you want to buy still have to pay for (un-utilized capacity)... and there still is too much capacity. And this over-capacity leads to severly depressed freight rates.

Good luck with your speculative play.

Feb 04 05:35 PM