Recently, many friends have asked me whether shipping stocks are still worth buying, so I’ve organized some of my observations.

To be honest, shipping is a typical economic barometer. When global trade is active, it rises dramatically; when the economy contracts, it is immediately dragged back. The volatility over these past few years has indeed been quite large—from the severe blow during the 2020 pandemic, to the strong rebound afterward, and then to the continued decline over the past two years. In other words, it’s basically been a roller coaster.

I looked at the data. Maersk, the world’s largest shipping company, was still at a high level in early 2022, but over the past two years its market value has already fallen by 60%. Hapag-Lloyd is similar: it has retreated by nearly 70% from its peak at the end of 2022. The earnings are even worse. Maersk’s quarterly profit dropped from $8.8 billion in mid-2022 straight to $1.453 billion in mid-2023, a decline of 83%. Such a drop is definitely a bit surprising.

So how should we look at the future of shipping stocks? I think there are several key factors worth paying attention to. First is the Federal Reserve’s interest rate policy. The federal funds rate is still at a high of 5.5%, which does suppress global economic growth. Once inflation returns to a normal range and the Fed starts cutting rates, the global economy should be able to catch its breath, which would be a positive for shipping stocks.

But there’s also a more complicated factor here—geopolitics and supply-chain restructuring. The U.S. is moving production capacity out of China, with many shipments shifting toward the Americas and Europe. This will hit companies that mainly operate routes from the Far East to Europe and America more severely. Taiwanese shipping companies such as Evergreen and Yang Ming are more affected, because their business depends heavily on these routes. By contrast, companies like Maersk, which have a more balanced global route layout, have much stronger resilience to risks.

Another trend that can’t be ignored is environmental protection. Going forward, requirements related to carbon emissions will only get stricter. Large shipping companies can gain a competitive advantage because their fleet size is big enough to spread out the costs of environmental upgrades. Small and mid-sized shipping companies face greater pressure in this regard.

From the perspective of oil prices, ongoing geopolitical tensions bring uncertainty, and fluctuations in crude oil prices also significantly affect the cost side of shipping companies.

Taking all these factors into account, my advice is: if you want to invest in shipping stocks for the future, you should choose large companies—preferably with a market value of over $10 billion. Small companies simply can’t withstand the industry downturn during periods of weakness. Second, avoid those that are overly dependent on a single route, especially those mainly operating routes from the Far East to the Americas and Europe. Third, look at the fleet’s vessel age—new ships are better aligned with environmental requirements, which can reduce future compliance costs.

Overall, the future direction of shipping stocks is still closely tied to the macroeconomic environment. If you’re considering entering the market, I recommend building positions in batches near the bottom of the long-cycle period, holding long term, and then gradually exiting as the cycle approaches its peak. This sector isn’t suitable for short-term speculation—you’ll need patience.

If you want to trade these assets, you can consider participating through the contract tools of certain trading platforms. That way, you don’t need to hold the underlying assets directly, and you can still trade based on price movements. Of course, any derivatives trading comes with risks, so you need to control your position sizing well.