Barclays sees a “dawn of a new annus horribilis” for the global container shipping industry, expecting the market to enter a period of “significant” losses in 2024-2025, says an article published on xm website.
New Challenges On The Horizon
Barclays paints a bleak picture for the global container shipping industry, anticipating a challenging period with significant losses in 2024-2025. The brokerage points to an impending “annus horribilis,” signaling the dawn of a tough year ahead.
Oversupply Woes
The core issue identified by Barclays is the persistent oversupply in the container shipping market. The brokerage foresees an exacerbation of this oversupply in 2024, creating a troublesome environment compounded by subdued demand. The expected outcome is significant losses at the EBITDA level.
Dim Prospects For Recovery
Barclays expresses skepticism regarding a swift recovery in trade activity, emphasizing that it may not be robust enough to absorb the existing oversupply plaguing the industry. This lack of optimism adds to the challenges faced by container shipping companies.
Initiating Coverage, Underweight Ratings And Price Target Adjustments
Hapag-Lloyd, Elevated Costs And Declining Freight Rates
Barclays initiates coverage on Germany’s Hapag-Lloyd (HLAG.DE) with an “underweight” rating. The brokerage points to Hapag-Lloyd’s elevated unit costs coupled with a continuous decline in freight rates as reasons for the cautious stance.
Reiterated “Underweight” For Maersk And ZIM
Barclays maintains its “underweight” rating for Maersk (MAERSKb.CO) and ZIM (2SV.F). For Maersk, it adjusts the price target downward from DKK 9,600 to DKK 8,250, indicating a 24% downside to the share price as of December 1. The brokerage raises concerns about Maersk’s strategy of evolving into an integrated container logistics operator, citing “significant risks.”
Market Response And Stock Movements
Hapag-Lloyd And Maersk Share Performance
In response to Barclays’ cautious outlook, Hapag-Lloyd shares experience a decline of around 3%, while Maersk sees a 2.4% slip in its share value. The market appears to be reacting to the concerns raised by Barclays regarding these shipping giants, indicating potential challenges ahead for the industry.
In conclusion, Barclays’ warnings and underweight ratings underscore the fragility of the container shipping market, signaling tough times ahead for key players in the industry.
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Source: Xm news
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