This bodes well for the bottom-line growth of shipping stocks.

Notably, oil price declined 6.6% in the April-June period. Oil Price Decline: The decline in expenses on fuel represents another tailwind for the industry. In fact, demand for Chinese goods is waning globally, with consumer spending being hit by inflation, in addition to shifting of preferences from goods toward services. With the shipping industry responsible for transporting the bulk of the goods involved in global trade, China's export drop is a worry for the industry. These do not bode well for the industry participants.ĭemand Weakness for Goods Out of China: Despite a pickup in economic activities and reopening of the Chinese economy, the fact remains that the country's export volumes to the United States are dropping. Challenges in Europe are also hurting shipping volumes. Sluggish economic growth and inflationary woes are likely to hurt consumer spending in the remainder of 2023. With inflation remaining a formidable foe, risks associated with an economic slowdown and geopolitical tensions dampen the prospects of stocks belonging to this industrial cohort. This marked the highest range of the Fed fund rate since March 2001. On Jul 26, the Fed raised the benchmark lending rate by 25 basis points to the range of 5.25-5.5%. The Fed reinitiated its interest rate hike process in the July FOMC meeting after taking a breather in June.

stock markets but the fact remains that we are far from being out of the woods. Below-par freight rates are also hurting the industry's prospects.Įconomic Uncertainty Remains: Agreed that signs of easing inflation have brought some sort of relief for U.S.

Costs will likely continue to be steep going forward due to supply-chain and labor troubles. Increased operating costs are also limiting bottom-line growth. Supply-Chain Disruptions & Weak Freight Rates: Although economic activities picked up from the pandemic gloom, supply-chain disruptions continue to dent stocks in the industry. 4 Key Investing Trends to Watch in the Transportation-Shipping Industry

The resumption of economic activities after coming to a standstill due to COVID-19 bodes well for the industry. The well-being of the industry participants is directly proportional to the health of the economy. The change in the e-commerce landscape due to the coronavirus impact implies that shippers are relying more on third-party logistics providers. Some participants are owners and operators of containerships for charter. The industry also includes players that own, operate and manage liquefied natural gas carriers. Most participants focus on the seaborne transportation of crude oil and other oil products, globally. The companies belonging to the Zacks Transportation - Shipping industry, which is cyclical in nature, offer liquefied natural gas and crude oil marine transportation services under long-term, fixed-rate contracts with energy and utility bigwigs. Declining fuel costs too represent a tailwind as far as bottom-line growth is concerned. Despite the challenges, we believe that stocks like Kirby Corporation, DHT Holdings and Teekay Tankers should grace one's portfolio, given the improvement in the demand scenario from the pandemic lows.

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