2020 was the year of tech companies that thrived amid a world of pandemic restrictions and a move online. 2021 was a more idiosyncratic year, as companies that benefited from resurging demand for reopening did well, but not quite as well as predicted, while companies who either navigated supply chain issues or benefited from them also did well, as the semiconductor sector and the energy sector exemplify.
Shipping, or at least certain parts of the industry, was another big winner. All those photos of ships waiting to enter ports off the West Coast, and all the companies that reported “one-time” elevated freight expenses in earnings last year represent the challenges the world economy has faced, and companies in the containership industry – whether liners, ship lessors, or box lessors – have all done pretty well as a result. As you’ll hear in this conversation, pretty well is an understatement.
What does this say about the sector’s prospects in 2022? I talked with J Mintzmyer, lead researcher of Value Investor’s Edge, about the state of the sector. J is one of the foremost global experts in shipping, so his words always carry weight in the sector. That he’s coming off a sterling 2021 market performance, as he discusses at the beginning of our video, only adds to that weight.
The outlook for 2022? J argues that while there’s no way to repeat 2021, the risk-reward looks as attractive as any he’s seen. We talk about that risk-reward by diving into specific sub-sectors of the shipping industry, including containerships but also dry bulk and tankers. We also discuss the supply chain issues that are still dragging on and what the “insidious” trends were that brought us to this place. As always, J shares a few names worth watching for investors, including ZIM Integrated Shipping Services Ltd (NYSE:ZIM), Danaos Corporation (NYSE:DAC), Textainer Group Holdings Ltd (NYSE:TGH), and International Seaways Inc (NYSE:INSW). And as always given the sector’s reputation, we discuss governance in shipping and how it’s held up over this turbulently profitable period.
Check out the full video above, and the show notes below.
1:00 minute mark – 2021 Review – a year of two parts, and unprecedented moves
8:00 – 2022 outlook – continued excitement for containerships
13:30 – Shipping supply chain outlook
17:00 – How does the supply chain get solved?
21:00 – The shipbuilding outlook in containerships
24:30 – Barometer reading on corporate governance in shipping, and Zim as an example
30:30 – Other sectors to watch – dry bulk and tankers
37:00 – Names to watch – INSW
J Mintzmyer is long ZIM, DAC, TGH, INSW. Daniel Shvartsman has no positions in any stocks mentioned. Nothing on this video should be taken as investment advice.