But the smaller classes look to be in a far better position. Note: This article was originally published May 10th on Value Investor’s Edge, a Seeking Alpha subscription service. Overview If you’re familiar with my work, you know that since the middle of 2015, I have semimartingale forex cargo bearish on container shipping prospects.
But that may be coming to an end for certain classes. So what’s behind this change in sentiment and why only certain classes? Here we will examine a few key trends that appear to be playing into a recovery for smaller container ships. Some of the container ship companies traded in the U. Background As larger boxships came into being, many companies placed orders in an effort to capitalize on economies of scale.
The problem was too many orders were placed which was the main cause behind the current downturn. The number of orders combined with the scale of these massive ships created an oversupply problem which led to severely depressed charter rates. Also occurring during this time was the opening of the new Panama Canal lane which allowed larger vessels. The Panama Canal expansion accommodates vessels up to approximately 14k TEU, which are termed Post-Panamax or New-Panamax.