The shipping industry is experiencing significant disruption, driven by the adoption of cutting-edge technologies and sustainable practices. Thus, investors might load up on shares of shipping stocks ZIM Integrated Shipping Services Ltd. (ZIM), Matson, Inc. (MATX), and BW LPG Limited (BWLP), which are well-positioned to thrive in the future.
The demand for faster shipping options is on the rise, with businesses increasingly embracing same-day and on-demand shipping solutions. This trend is being fueled by the growth of eCommerce and the pressing need for timely deliveries, prompting logistics companies to invest in quicker and more efficient shipping methods to meet customer expectations.
Artificial Intelligence (AI) is also playing a transformative role in the shipping and logistics market, which is expected to reach $12.87 billion by 2026, according to the Gitnux Market Data Report 2024. The surge in AI adoption underscores the industry’s push toward more innovative and efficient operational practices.
Moreover, sustainability remains a key focus as customers demand more environmentally responsible shipping options. Businesses are responding by adopting alternative fuels, electric vehicles, and carbon offset programs, reflecting the accessibility of sustainable transportation.
Given these inclinations, global trade trends have turned positive in 2024, with the first quarter witnessing a 1% increase in goods trade and a 1.5% rise in services trade quarter-over-quarter.
This growth, driven by positive dynamics in the United States and large Asian developing economies, is expected to add $250 billion to goods trade and $100 billion to services trade in the first half of 2024.
Looking ahead, the cargo shipping market is expected to grow significantly, from 11.89 billion tons in 2024 to 14.72 billion tons by 2032, reflecting a CAGR of 2.7%, according to a report by Fortune Business Insights.
Additionally, the container shipping market size is estimated to grow from $116.04 billion in 2024 to $134.03 billion by 2029, at a CAGR of 3.11%, as per a report by Mordor Intelligence.
Considering these favorable trends, let’s take a closer look at the fundamentals of the three Shipping picks, starting with number #3.
Stock #3: ZIM Integrated Shipping Services Ltd. (ZIM)
Based in Haifa, Israel, ZIM operates a global fleet and network of shipping lines, providing comprehensive cargo transportation services across major trade routes. Its services include multi-modal solutions, cargo handling, tariff management, and schedule information.
On June 27, ZIM launched its premium ZIM Central China Xpress (ZX2) service, connecting Central China to the U.S. West Coast. This new service reduces transit times and aligns with market demands, enhancing customer satisfaction and supporting ZIM’s growth by expanding its competitive edge and global reach.
On January 9, ZIM announced the integration of tracking devices from Hoopo Systems Ltd., a company specializing in innovative solutions for unpowered assets, into its dry-van container fleet. The upgrade would enhance service levels by providing valuable information, boosting transparency, and supporting ZIM’s growth and market position.
For the fiscal 2024 second quarter that ended June 30, 2024, ZIM’s total revenues increased 47.6% year-over-year to $1.93 billion. Its operating income stood at $468 million, compared to a loss of $168 million in the previous year’s quarter. Also, the company’s adjusted EBITDA rose 187.5% from the year-ago value to $766 million.
Moreover, ZIM’s net income and EPS came in at $373 million and $3.08, compared to a net loss and loss per share of $213 million and $1.79 in the previous year’s quarter.
Analysts expect ZIM’s revenue for the fiscal third quarter ending September 2024 to increase 88.8% year-over-year to $2.40 billion. In addition, the company’s EPS for the ongoing quarter is expected to come in at $6.31.
Shares of ZIM have surged 53.4% over the past six months and 85.1% year-to-date to close the last trading session at $18.27.
ZIM’s POWR Ratings mirror its robust outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
ZIM has a B grade for Growth, Value, Momentum, and Quality. It is ranked #11 out of 39 stocks in the A-rated Shipping industry.
In addition to the POWR Ratings highlighted above, one can access ZIM’s ratings for Stability and Sentiment here.
Stock #2: Matson, Inc. (MATX)
MATX specializes in ocean transportation and logistics. Its Ocean Transportation segment delivers freight services to domestic non-contiguous economies. The Logistics segment offers services like multimodal brokerage, supply chain management, and non-vessel operating common carrier freight forwarding.
MATX’s total operating revenue for the fiscal second quarter ended June 30, 2024, increased 9.6% year-over-year to $847.40 million. Its operating income rose 28.9% over the year-ago value to $124.60 million. Also, the company’s net income and EPS rose 40.1% and 46.5% from the prior year’s period to $113.20 million and $3.31, respectively.
In the third quarter of 2024, MATX expects Ocean Transportation operating income to be significantly higher than the $118.2 million achieved last year. For the fourth quarter of 2024, the company anticipates a moderate increase in Ocean Transportation operating income compared to the $66.4 million recorded in the fourth quarter of 2023.
For Logistics, MATX anticipates that operating income in both the third and fourth quarters of 2024 will approximate the levels achieved last year.
As a result, MATX now expects consolidated operating income for the third quarter of 2024 to be significantly higher than the $132.1 million achieved in the third quarter of 2023 and for the fourth quarter of 2024 to be moderately higher than the $75.3 million achieved in the fourth quarter of 2023.
For the fiscal third quarter ending September 2024, MATX’s revenue and EPS are expected to increase 16.9% and 37.2% year-over-year to $967.68 million and $4.66, respectively. Moreover, the company topped the consensus revenue and EPS estimates in each of the trailing four quarters, which is impressive.
Shares of MATX have gained 24.5% over the past six months and 54.5% over the past year to close the trading session at $138.30.
MATX’s solid fundamentals are reflected in its POWR Ratings. It has an overall rating of B, translating to a Buy in our proprietary rating system.
MATX has a B grade for Sentiment, Momentum, and Quality. The stock is ranked #5 out of 39 stocks in the Shipping industry.
To access additional grades of MATX for Growth, Value, and Stability ratings, click here.
Stock #1: BW LPG Limited (BWLP)
BWLP, headquartered in Singapore, is an investment holding company active in global ship owning and chartering. Operating through the Shipping and Product Services segments, the company focuses on transporting liquefied petroleum gas for oil, trading, and utility sectors, facilitating critical energy logistics worldwide.
On August 15, BWLP announced agreements to acquire 12 modern Very Large Gas Carriers (VLGC) from Avance Gas Holdings Ltd. for a total consideration of $1.05 billion. The fleet includes four 91,000 cubic meter dual-fuel VLGCs, two built-in 2022 and two in 2023, and eight 83,000 cubic meter VLGCs from 2015, with six featuring scrubbers.
The transaction significantly scales up BWLP's fleet, increasing the number of owned and operated VLGCs from 41 to 53, including 22 dual-fuel LPG vessels. This expansion reinforces BWLP's position as the world’s leading VLGC owner and operator, with the largest number of LPG dual-fuel powered VLGCs.
For the fiscal 2024 second quarter that ended June 30, 2024, BWLP’s operating profit increased 10.3% year-over-year to $89.31 million. Its profit after tax grew 8.6% from the year-ago value to $89.91 million. Plus, the company’s total comprehensive income came in at $76.79 million, up 37.4% from the prior year’s quarter.
The consensus revenue stands at $790.38 million, marking a modest year-over-year increase of 6.7% for the fiscal year ending in December 2025. Furthermore, the company has surpassed the expected revenue estimates in all of its trailing four quarters.
Shares of BWLP have surged 32% over the past six months to close the last trading session at $15.85.
BWLP’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
BWLP has a Quality grade of A and Growth and Sentiment grades of B. The stock has topped the 39-stock Shipping industry.
Beyond what is stated above, we’ve also rated BWLP for Value, Momentum, and Stability. Get all BWLP ratings here.
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MATX shares were unchanged in premarket trading Monday. Year-to-date, MATX has gained 27.23%, versus a 19.34% rise in the benchmark S&P 500 index during the same period.
About the Author: Aanchal Sugandh
Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.
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