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Why The Bull Market In Container Shipping Will Continue



  • Container shipping rates have been soaring and stock prices for companies have been rocketing upwards - creating many multi-baggers along the way.
  • The demand side deserves some credit but the bull market roots can be traced back to a supply-side outlook that has correctly been forecasting a tighter market.
  • Here we examine the supply side in depth, as it typically shapes the medium to longer-term markets, in an effort to understand why this bull market has staying power.
  • I do much more than just articles at Value Investor's Edge: Members get access to model portfolios, regular updates, a chat room, and more. Get started today »

Note: This report was originally published on January 23, 2021, on Value Investor's Edge. This report covers the supply-side for container shipping which is relevant to US-listed, including Costamare (CMRE), Capital Product Partners (CPLP), Danaos (DAC), Global Ship Lease (GSL), MPC Container (OTCPK:MPZZF), Navios Maritime Containers (NMCI) and Zim Integrated Shipping (ZIM). The full container shipping demand-side outlook is available on VIE, which compliments this particular report.


Before 2020 we had been discussing the potential for a bull run in the small to midsized container shipping segment as capacity additions were set to fall below levels needed for vessel replacement and trade expansion.

But as the pandemic set in, and demand destruction at the onset became apparent, container rates fell across the board. As the new 'pandemic economy' emerged over the summer it became clear that demand for services, travel and leisure were being replaced by finished goods, leading to a rebound in container traffic and rates.

This goes on to explain the chart below which saw freight rates tumble at the onset only to see a demand-driven return toward the end of the year.

Source: Clarksons SIN

This rebound is even more impressive when put in perspective.

Source: Clarksons SIN

Notice in the chart above we see not only the steady improvement since spring of 2017 but also at the start of 2020 we were already at highs not seen in almost a decade.

The improvement witnessed from 2017 through 2019 was the result of fairly average trade growth (3.63% average annual cargo mile demand growth for those years) coupled with a tightening supply side, specifically in the small to mid classes.

2021 will likely see a continuation of this trend as I am forecasting approximately 3% net capacity growth against a 5.5% increase in cargo mile demand.

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This article was written by

James Catlin profile picture
The ultimate shipping and logistics platform.
James has degrees in both Economics and Political Science. He is a small business owner with several years of past political experience and 20 years of active investing.
The majority of James' work can be found on Value Investor's Edge.

Value Investor's Edge is a top-rated research service dedicated to offering actionable trades and strategic income opportunities. We now cover a variety of deep value and income-driven sectors, while maintaining our focus and very profitable record of shipping industry coverage. Members receive exclusive access to over a dozen reports per month, including regular shipping and commodity macro analysis from James Catlin, exclusive content by top-tier deep value analyst J Mintzmyer and industrial and MLP ideas from Michael Boyd. This winning team has developed a dedicated following of highly knowledgeable investors and industry professionals who also share their own research, thoughts and ideas.

Analyst’s Disclosure: I am/we are long CMRE, DAC, NMCI, ZIM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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