Investment attractiveness of the container transportation market: an overview of the surge in demand
During the pandemic, the investment appeal of the container shipping market increased significantly. This was reflected in the stock prices of companies that provide such services. Their price jumped by 400% compared to the figures before the pandemic. According to analysts from the agency Alphaliner, this jump in quotations in this segment many times exceeds the growth that was recorded in the stock markets for almost 2 years.
Among the companies which are engaged in transportation of cargo by containers the first place belongs to the operator Yang Ming from Taiwan. Its shares rose in price by 996%, which was a record for the market. Judging by the situation as a whole, the greatest increase in the value of shares was observed in companies from Asia. As for the S&P 500 index, it demonstrated a 29% growth. At the same time, the S&P Asia 50, which is used on the exchanges of Taiwan, Hong Kong, Korea and Singapore, showed a result of 39%.
Interestingly, after the start of the pandemic, many experts feared that container shipping could suffer serious losses. However, 2020 showed a completely different development, the demand for such services soared as consumers switched to online shopping.
Analysts predict that the growth in demand for transportation companies will continue to grow, container transportation will remain a highly profitable and in-demand business for at least 1 year. Last year the total operating profit in the segment amounted to 26.6 billion dollars, which is considered a record high, ever registered for this market. Total operating margin was at 13%. The current period is also estimated to show strong results, as will the next 2022. And the growth of profitability of container transportation will be almost unaffected by such global factors as high fuel prices and an increase in oil delivery tariffs.
Profit growth is confirmed by major logistics companies, including Moller-Maersk. It reported record results for the previous quarter of this year. The operating profit of the company amounted to 3.1 billion dollars, while revenues were recorded in the amount of 12.4 billion dollars.
As a result of the surge in demand for container services, there were problems with the operator’s capacity, and there was an acute shortage of equipment. This situation led to an increase in the size of freight rates, which rose to record levels.
Besides, there is a growing dynamics of container losses in the segment, their number grew to the highest value for the last 7 years. Last year about 3 thousand containers were lost at sea, and since the beginning of 2021 – more than 1 thousand.
