News / Investors seeing 'inverse correlation' between liner profits and war in Gaza

Shareholders are hoping their container line will not be the first to resume Red Sea transits, analysts say, after a dip in liner equities following the UN Gaza ceasefire resolution of 10 June.

Maersk, Hapag-Lloyd and ONE all experienced dips in share price recently, while Clarksons Securities’ indices highlight losses of 5% last week and 9% since.

Liner profits and the war in Gaza now appear inversely correlated, said Clarksons Securities analyst Frode Mørkedal in a report.

“The UN ceasefire resolution last week had a negative impact on these stocks. If the situation stabilises and rerouting around Africa ends, containerships… may see lower earnings.”

The Red Sea crisis has tied-up capacity and generated considerable returns for shipping lines in recent months, particularly as the aftermath of Covid had already left them debt-free and cash-rich.

Listen to this clip from The Loadstar Podcast to hear Christian Roeloffs, co-Founder & co-CEO, Container xChange, talking to host Mike King about what will happen if the Suez reopens:

UK Maritime Trade Operations (UKMTO) reports Liberia-flagged Greek bulker Tutor sank after being attacked by a Houthi remote-controlled skiff or rib laden with explosives, which some media outlets have suggested was disguised as a fishing boat.

A crew member, reportedly in the engine room at the time of the attack, remains missing, while other crew members were evacuated before the vessel, the second ship casualty of the Red Sea conflict, sank.

A joint statement from industry associations the International Chamber of Shipping (ICS), World Shipping Council (WSC), Bimco, Intermanager and others this morning condemned the sinking and called for action from “states with influence in the region”.

They said: “We have heard the condemnation and appreciate the words of support, but we urgently seek action to stop the unlawful attacks on these vital workers and this vital industry. We utterly condemn these assaults which directly contravene the fundamental principle of freedom of navigation.”

Houthi statements remain explicit in linking their actions with the Israel-Palestine conflict.

“The Yemeni Armed Forces will continue, with the help of Allah almighty, in solidarity with the Palestinian people, and retaliate to the American-British aggression until the aggression is stopped and the siege of the Palestinian people in the Gaza strip is lifted,” they said on Sunday.

But the question remains as to whether a ceasefire – a pause in hostilities, rather than an end – would meet Houthi criteria for a pause in their own attacks. The group has declined to respond to Loadstar enquiries.

Stanley Smulders, director of marketing and commercial at ONE, told The Loadstar at last week’s Multimodal event in Birmingham that some shipping lines were trying to “sneak vessels through”, but a widescale return to the Red Sea would not happen quickly.

“Many of our customers do not want vessels transiting the Suez canal at the present time, due to cargo insurance exclusions. Many cargo insurers have issued notices of cancellation to war and strikes insurance cover, leaving cargo owners vulnerable. So whilst we know that other shipping lines are occasionally trying to sneak vessels through (with or without military assistance), this is not inline with insurers or ONE’s customer requests.”