Shipping companies who move oil could be one set of losers following OPEC's deal to cut production for the first time in eight years.
"Shipping is a volume game, so higher OPEC production has supported the tanker rates over the past few years," according to Rahul Kapoor, director of Drewry Financial Research Services."We don't have the numbers yet... but if all were to come true in terms of cuts, this would be negative for the market."
DryShips (NASDAQ:DRYS) is halted at the open after announcing a $20M direct offering, with the potential to receive total proceeds of up to $100M if all preferred warrants are exercised; shares will resume trading at 10:30.
Other shippers continue to show strong gains at the open despite the DRYS offering: SINO +99%, DCIX +47%, ESEA +26%, GLBS +21%, SB +14%, SHIP +11%, SALT +3%, DSX +2%, GNK +1%, EGLE +1%, GOGL +1%, SFL +1%.
The world's largest container shipping firm is seeing a short-term rise in freight rates and an inflow of new clients after the collapse of Hanjin Shipping (OTC:HNJSF).
"There's no doubt that we're seeing a reaction in the rate market," said Klaus Rud Sejling, the executive in charge of Maersk Line's (OTCPK:AMKAF) east-west network. "In the short term, the effect is positive... The question is, what will happen with rates in the longer term."
Korean Air Lines, the biggest shareholder in Hanjin Shipping (OTC:HNJSF), has delayed a decision on a funding plan for the troubled company for a second time, adding to the uncertainty of around $14B of cargo stranded at sea.
With Hanjin's future in doubt, carriers have announced they will hike container freight rates by as much as 50% beginning next month as retailers scramble to secure shipping ahead of the peak year-end holiday season.
Frontline (FRO +8.5%) rallies after the company topped revenue expectations with its Q1 report by a wide margin ($227M vs. $187M consensus).
The company also pointed to firming tanker rates and said it will stick to its dividend policy.
The strong read from Frontline is giving a lift to the broad sector with Ship Finance International (SFL +2.9%), DHT Holdings (DHT +1.5%), Teekay Tankers (TNK +1.3%), and Gener8 Maritime (GNRT +5.5%) all showing gains.
Shippers are protesting a new marine shipping safety rule they say will raise transport costs and cause delays at ports worldwide.
The regulation, which kicks in next July in 171 countries, requires exporters to certify the weight of containers before they're loaded for transport.
Carriers say accurate weights are needed because heavy containers frequently damage cargo and even cause vessels to capsize, but shippers in many countries say they are ill-equipped to weigh so many containers.