UNCTAD warns of high shipping rates: 2 stocks to buy

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UNCTAD warns of high shipping rates: 2 stocks to buy

 UNCTAD warns of high shipping rates: 2 stocks to buy
Image source: 13_Phunkod, Shutterstock.com

Highlights

  • Global consumer prices are set to jump by 1.5 per cent, and global import prices are estimated to increase by 11 per cent between 2021 and 2023, according to a UNCTAD report
  • The rise is due to the supply chain bottleneck being faced by the industry.

A sharp rise in container shipping rates is expected to lead global import prices to jump by 11 per cent and consumer price levels to rise by 1.5 per cent between 2021 and 2023, according to the Review of Maritime Transport 2021 report.

As per the report published by a UN body, the UN trade and development agency (UNCTAD), the global consumer prices are expected to see a significant jump until the shipping supply chain disruptions, port constraints, and terminal inefficiencies are all resolved.

The shipping industry saw a surge in demand in H2 2020 as consumers opted to spend money on goods instead of services amid the lockdowns.

This led to bottlenecks across several areas, such as container and labour related shortages, port congestion and covid-19 restrictions.

Maritime trade fell by 3.8 per cent to 10.65 billion tons last year but is forecasted to jump by 4.3 per cent this year.  UNCTAD estimates annual growth in the industry to drop to 2.4 per cent between 2022 and 2026. Comparatively, the annual growth over the past 20 years was at 2.9 per cent.

The report stated that various stakeholders across the maritime supply chain should work together and share information in order to improve maritime transport efficiency.

Industry supply chain stakeholders include container lines, ports, inland transport providers, customs and shippers, amongst others.

In view of this, let us take a closer look at 2 FTSE listed stocks in the industrial transportation industry and how they have performed:

  1. Irish Continental Group PLC (LON: ICGC)

Main market listed company Irish Continental Group is an Irish shipping and transport company.

The company recently bought the passenger cruise ship, the Calais Seaways. It is expected to serve in the Dover-Calais route.

The ship has a gross tonnage of 28,833 tonne and, its passenger capacity stands at 1,140. Also, its freight unit carrying capacity is 83 units.

ICGC share price and volume

(Image source: Refinitiv)

Irish Continental Group’ shares were trading at GBX 379.00, down by 3.13 per cent on 18 November at 10:48 AM BST. And, the company’s market cap stood at £733.52 million on Thursday.

  1. Global Ports Holdings PLC (LON: GPH)

Another main market listed group, Global Ports Holdings, is the world’s largest independent cruise port operator and a marine cargo handling company.

It offers an integrated platform of cruise ports to cruise liners, ferries and others. It also provides commercial port operations.

The company recently reported its trading update for the 6 months ended on 30 September.

Its total revenue during the period jumped by 32 per cent to US$ 61.1 million, from US$ 46.4 million from the year before.

And its segmental EBITDA reversed from a negative to a positive, reporting US$ 2.1 million for the 6 months ended on 30 September, compared to negative US$ 3.6 million for the comparative period in the previous year.

Image description: GPH share price and volume

(Image source: Refinitiv)

Global Ports Holdings’ shares were trading flat at GBX 138.00 on 18 November at 10:59 AM BST. Comparatively, the industrial transportation sectoral index was at 4,782.56, up by 0.77 per cent.

The company’s market cap stood at £86.70 million, and it has a one-year return of 75.57 per cent as of Thursday

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