Morgan Stanley bearish on container shipping
A new research report from Morgan Stanley forecasts a 3 percent contraction in global container traffice in 2009.
“We expect all container shipping companies under our coverage to post steep losses in 2009,” said the report issued Thursday by analysts Sophie Loh, Chin Y. Yim and Pey Herng Yap.
“Shipping companies’ plans for Asia/Europe rate hikes in March- April are an indication that rates have troughed,” the analysts said. “But we believe this does not point to a sustainable rate recovery, as laid-up vessels returned to operations and large vessel deliveries act as a floor for rates.”
They also said they “see rate downside in the upcoming May transpacific contract negotiations. Container stocks will underperform, in our view, unless freight rates stabilize and move to an uptrend.”
It is “too early to accumulate container shipping stocks despite valuations close to trough levels: We see further downside to freight rates over the next six months,” the report said.
The analysts said they would be more bullish on the industry if they saw more aggressive supply-side rationalization through cancellations of ship orders, a pushing out of delivery delays, and scrapping of older containerships, as well as a recovery in consumer sentiment and demand.
Morgan Stanley bearish on container shipping
