Shipping Container Stocks Are on a Dip, Might Be Worth the Buy
With a literal shortage of shipping containers comes a subsequent stock market struggle. However, shipping container stocks might still be worth the buy.
Jan. 25 2021, Published 11:47 a.m. ET
Consumers love their deliveries, but they don't usually think about how the product gets to their front door. Services like last-mile and freight delivery are at the core of the process. Shipping containers also play an important role in the process.
Lately, shipping container stocks have been struggling in two ways. First, the literal stock of containers is low in certain parts of the world. Second, the stock market is responding accordingly.
Maersk stock reacts to lost shipping containers
In mid-January 2021, Maersk (one of the biggest shipping container companies, which trades under the symbol "AMKBY" on the OTC markets) lost 750 containers at sea. A ship was traveling from China to Los Angeles and lost the cargo during a storm. Now, the ship is heading to Mexico for analysis.
Maersk stock fell 9.93 percent in the four days following Jan. 20. The company has lost its rally from earlier in the year.
Danaos Corporation stock is down in the short term
Danaos Corporation ("DAC" on the NYSE) has seen a 10.89 percent dip since Jan. 10. However, the shares have grown in value by more than 350 percent in the past 12 months, so it isn't anything to worry about.
Could a ZIM public offering change the fate of the sector?
ZIM is an Israeli shipping container company that recently filed for its own IPO. This could bring momentum to the market, especially since the company plans to list on the NYSE. The trans-Pacific exposure could help augment companies like Matson Inc. ("MATX" on the NYSE) for more growth. Also, ZIM takes a different route with its capital by leasing most of its shipping containers (instead of owning them outright).
For investors seeking industry and geography diversification, a ZIM IPO buy is something to consider.
Investing in shipping container stocks
It seems like the e-commerce boom is too fast and too furious for supply chain logistics to keep up. Ever since the start of the COVID-19 pandemic, at-home delivery has ramped up quickly. In fact, the U.S. e-commerce industry saw a 37.1 percent increase in the third quarter of 2020 compared to the same period the previous year.
From retail investors' perspective, products like shipping containers are easily forgotten amid the hustle and bustle of household names. All of the talk is centered around companies like Bumble and SoFi entering the public market, but these integral pieces of the puzzle matter just as much as the picture itself.
Shipping containers are a necessity in the modern age. With the prices on the dip, it may actually serve your portfolio well to invest in some shipping container stocks. This will allow the companies to reinvest in their development and reduce the effects of the shortage, which ultimately leaves companies and their shareholders in the green.