Several positive fundamentals are in place these days that spell a very promising word for shipping, according to an analyst: supercycle.
BTIG's Greg Lewis laid out essentially a perfect storm of factors that set the stage for such a phenomenal period across maritime since the last one took hold from 2004 to 2008.
"And while shipping supercycles are arguably once in a lifetime ... just 13 years later the pieces look to be falling into place for another supercycle," he wrote.
He highlighted tight supply and slow steaming for the International Maritime Organization's pending Energy Efficiency Design Index (EEXI) as the main drivers for a supercycle.
"What has us thinking about supercycles across pockets of shipping is the record low supply growth expected over the next two years and the implementation of EEXI, which has the potential to boost fleet utilisation by 5% to 15%," he wrote.
But he named several other things that could boost shipping through 2025, such as post-Covid-19 pent-up demand for goods, inflation, rising commodity prices and a growing global GDP.
He said stocks for Eagle Bulk Shipping and Scorpio Tankers as well as boxship players such as SFL are best positioned to benefit from these factors.
"However, we note in shipping a rising tide lifts all boats," he wrote.
Supply may remain tight in the years ahead because owners may be reluctant to order new ships amid uncertainty over what the dominant fuel of the future will be to meet environmental regulations.
"Currently, the IMO is targeting a 40% reduction in carbon intensity from the global fleet by 2030 and 50% by 2050, compared to 2008 levels," Lewis wrote.
