Make an Investment in The Top 3 Shipping Stocks

The shipping industry is in a better position now then it has been at any time since the global economic crisis in 2008. Additionally, private equity firms have taken notice of the change, and have invested more than $14 billion in shipping companies; in the first half of 2014.

This means that it is a great time to consider adding an investment in the shipping industry to your stock/investment portfolio. That said, here are 3 of the leading container shipping stocks:

Nordic American Tanker Ltd (NYSE: NAT), is a solid long-term investment. Currently, the company has a fleet of 22 Suezmax vessels to transport crude oil around the world.

With the decrease in crude oil costs, the company is saving $12,000 per day per vessel on fuel consumption.

Additionally, lowered oil prices created higher demand, making this an almost recession proof shipping company.

The 7.20% dividend yield makes this investment even more appealing.

SeaSpan (SSW) provides bunkering, ship repair, and ship building services.

The company just initiated a dividend yield, and expecting earnings of $.26 per share on $184.30 million in revenue for the quarter.

Global ship building continues to go strong, and when that recedes many shipping companies will need repairs for those ships.

Just like the ones who ultimately made money in the gold rush, were the stores. The shipping repair companies are poised to profit in global shipping.

MAERSKb.CO is the final company we are discussing today. When investing in a container shipping company, it might as well be the biggest container shipping company in the world. In terms of longevity, A.P. Møller-Maersk is very likely be around for many years to come. Moreover, the company is in the midst of a growth spurt, with new Triple-e ships on the way.

The company’s container shipping division – Maersk Line, has agreed to the new 2M alliance with the Mediterranean Shipping Company, which guarantees the alliance a 30% share of the international shipping market.

Strategies For Dealing With Container Shipping Overcapacity

The shipping industry has a problem. They built too many ships over the past decade, and now they need to think about, for the first time in recent history; how to deal with this overcapacity.

Below are three strategies could use to deal with the overcapacity.

1) Stop Building Ships.

This might sound crazy, but shipping companies faced with an overcapacity problem might want to consider only purchasing ships on an as needed basis. For example in the past year, the container shipping industry purchased 205 new ships, compared to only 70 in 2013. While old ships need to be retired to make up for new ones, there is no reason to do so, when so much overcapacity exists.

Just as there are shipping container leasing companies, there are also shipping rental companies that can help with supplying ships when there are sudden surges in demand. This solution should more than alleviate the need to continue investing in new and bigger ships.

2) Slow Down There Partner!

One of the best ways shipping companies combated high fuel price over the past few years was to use slow speeds of 14 to 18 knots compared to the normal 20 to 25 knots to deliver goods. The slowdown conserves oil. This is even more valuable now that oil is down 28 percent from its high point last year.

An unexpected bonus of slowing down is slower moving ships require more ships to deliver goods on time on a regular schedule.

3) Let’s Get Together.

Finally, shipping companies are meeting to discuss a solution together. The creation of the Transpacific Stabilization Agreement is a great example of this comradery among shipping companies. The group, which includes Cosco, Maersk Line, CGM CGM, Hapag-Lloyd, and the Mediterranean Shipping Company, have focused on everything from raising freight rates jointly to working on logistics.

When carriers get together to solve the overcapacity problem, good things can happen.

The overcapacity issue will continue to plague the industry, but with good planning and balance, the shipping industry can figuratively “right the ship.”