Maritime Market Insights: Drewry’s Port Equity Index Update

Analysis of Stock Performance and Port Operations in the Maritime Sector

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As of April 11, 2024, the Drewry Port Equity Index, a gauge of stock performance within the maritime port sector, recorded an increase of 8.0%, slightly trailing behind the 9.0% surge seen in the S&P 500. Concurrently, global terminal operators (GTOs) and regional terminal operators (RTOs) marked gains of 11.4% and 2.9%, respectively. However, assessing the first quarter of 2024, the Drewry Port Equity Index showcased a growth of 5.1%, compared to the broader 10.2% upturn registered in the S&P 500. Both GTOs and RTOs remained in positive territory, reflecting growth rates of 6.6% and 2.8%, respectively, as per Drewry’s “Ports & Terminal: Financial Insight” report.

Looking ahead, stock prices are poised to be influenced by the deflationary trend, which has presented notable challenges in recent trajectories. Evolving data continuously reshapes market expectations regarding the timing and scale of anticipated interest rate cuts in 2024. Additionally, individual country-specific factors increasingly impact policy decisions. While the recent 10-basis-point hike by the Bank of Japan marks its exit from negative interest rates after 8 years, markets anticipate interest rate cuts by the US Federal Reserve and the European Central Bank in the second half of 2024. Conversely, central banks in Latin American countries such as Brazil and Mexico have already initiated reductions, mirroring their economic conditions.

Container Ports Performance

According to our latest assessment, the global Container Port Performance Index decreased by 2.0% month-on-month in January 2024, to 110.3 points. This decline was primarily driven by a 6.4% drop reported in the Middle East and South Asia, closely followed by Asia (excluding China) and Greater China, which fell by 2.2% and 1.9% respectively. Oceania was the sole region to experience an uptick of 6.2% during the same period. However, on a year-on-year basis, the global Container Port Performance Index increased by 9.2%, supported by growth in all regions except the Middle East and South Asia, which experienced a 5.6% decline.

Port Operators’ Revenues

According to Drewry’s internally compiled revenue index, the port industry witnessed a revenue growth of 2.9% in 4Q23 on a quarter-on-quarter basis, primarily propelled by higher volumes and underlying tariff increases.

However, HHLA deviated from this trend, with volumes and revenues declining by 7.4% and 4.1% respectively during the same period. Historically, the company has faced stagnant volumes due to fierce competition from regional counterparts (Rotterdam and Antwerp), as well as recent declines in cargo volumes in the Far East, particularly in China. The increased revenues were partially offset by the 3.2% quarter-on-quarter rise in industry costs, tempering industry profit growth to 0.6% in 4Q23.

Despite minor adjustments, industry EV/EBITDA and PE profiles remained largely unchanged compared to the profile published in Drewry’s December 2023 report.

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