Billionaire Wilbur Ross says shipping undervalued, peaks PE interest too
US BILLIONARE Wilbur Ross, a renowned distressed asset investor, has turned bullish on shipping, believing there are opportunities containers and dry bulk, reports Motley Fool.
"Shipping containers transport 200 times the volume that parcel carriers like FedEx or UPS. Also boding well for the industry is a rise in shipping rates, which includes a rise in the average spot rates - including a 50 per cent rise in rates year on year as of late 2012 from Hong Kong to Los Angeles," said the Motley Fool, a Virginia-based financial services company that employs 200 people.
"Private equity has also been showing interest in shipping. Major private equity firms have been buying up shipping vessels of late, including Blackstone's buy of nine refined-product tankers toward the end of 2012," said Motley Fool.
Mr Ross is an American investor known for restructuring failed companies in industries such as steel, coal, telecommunications, foreign investment and textiles, specialising in leveraged buyouts and distressed assets. In 2011, Forbes magazine listed Mr Ross as one of the world's billionaires with a net worth of US$1.9 billion.
Mr Ross has also bought a majority stake in Navigator Holdings, a shipping industry leader. "While a number of stocks and industries might be considered economic bellwethers, one of the most overlooked is shipping," said the report.
The slowdown in the global economy has reduced the shipping industry at a time when the Baltic Dry Index has fallen 75 per cent in three years.
"Industry consolidation should help drive the industry higher. This will help better capitalise the industry and reduce its fragmentation. Part of what should help push the industry even higher will be a rebound in both the US and global economies," said the report.
Ships still move 90 per cent of the world's food, consumer and energy products, and assuming the world economy picks up, so should this sector, said the report. Key products spurring a rebound in the shipping industry will be agriculture, manufacturing and energy production.
Newark's Journal of Commerce sees capacity rising 10 per cent in 2013, with the supply-demand balance breaking even in 2014. There is still room for the shipping industry to go higher, as charter rates were up 20 per cent at the end of 2012 from their all-time 2009 lows, but they still remain 55 per cent below their long-term 20-year average.
The JOC projects US import growth of 5.2 per cent in 2013 with exports advancing 4.3 per cent. IHS Global Insight also expects the shipping market to expand in 2013, forecasting market growth of five to six per cent annually through 2015.
US BILLIONARE Wilbur Ross, a renowned distressed asset investor, has turned bullish on shipping, believing there are opportunities containers and dry bulk, reports Motley Fool.
"Shipping containers transport 200 times the volume that parcel carriers like FedEx or UPS. Also boding well for the industry is a rise in shipping rates, which includes a rise in the average spot rates - including a 50 per cent rise in rates year on year as of late 2012 from Hong Kong to Los Angeles," said the Motley Fool, a Virginia-based financial services company that employs 200 people.
"Private equity has also been showing interest in shipping. Major private equity firms have been buying up shipping vessels of late, including Blackstone's buy of nine refined-product tankers toward the end of 2012," said Motley Fool.
Mr Ross is an American investor known for restructuring failed companies in industries such as steel, coal, telecommunications, foreign investment and textiles, specialising in leveraged buyouts and distressed assets. In 2011, Forbes magazine listed Mr Ross as one of the world's billionaires with a net worth of US$1.9 billion.
Mr Ross has also bought a majority stake in Navigator Holdings, a shipping industry leader. "While a number of stocks and industries might be considered economic bellwethers, one of the most overlooked is shipping," said the report.
The slowdown in the global economy has reduced the shipping industry at a time when the Baltic Dry Index has fallen 75 per cent in three years.
"Industry consolidation should help drive the industry higher. This will help better capitalise the industry and reduce its fragmentation. Part of what should help push the industry even higher will be a rebound in both the US and global economies," said the report.
Ships still move 90 per cent of the world's food, consumer and energy products, and assuming the world economy picks up, so should this sector, said the report. Key products spurring a rebound in the shipping industry will be agriculture, manufacturing and energy production.
Newark's Journal of Commerce sees capacity rising 10 per cent in 2013, with the supply-demand balance breaking even in 2014. There is still room for the shipping industry to go higher, as charter rates were up 20 per cent at the end of 2012 from their all-time 2009 lows, but they still remain 55 per cent below their long-term 20-year average.
The JOC projects US import growth of 5.2 per cent in 2013 with exports advancing 4.3 per cent. IHS Global Insight also expects the shipping market to expand in 2013, forecasting market growth of five to six per cent annually through 2015.