The strong performance in the global container shipping sector has generated very handsome spill-over benefits for stock investors (see Figure 1). The returns since the start of 2020 have been astronomical.

Asian liner operators were the top performers; with Yang Ming up by 1,583% (as of mid-December 2021), followed by Evergreen Marine’s gain of 987% and Wan Hai’s 976%. HMM generated returns of 621%. More modest growth was seen in Europe, where Hapag-Lloyd shares increased by 192% and Maersk’s by 123%.

Part of this remarkable performance can be attributed to strengthening balance sheets as data from 12 carriers suggests cumulative debt has reduced by $3.5 billion between end-December 2020 and end-September 2021 to $73.2bn. Quite a number of carriers are in a net cash position, meaning their cash balance exceeds total debt, a rarity for the sector.

Clearly, the pandemic and ensuing supply chain crisis that supercharged carrier profits has been the primary driver for the share price bonanza. This was reinforced when share prices bounced back in November after discovery of the Omicron variant, having previously been in retreat since July when there was greater hope for swifter market normalisation.

To further boost investors’ confidence, major shipping lines are also buying back shares. Maersk’s directors have approved an additional share buyback programme of DKK 32 billion ($5bn) over the years 2024 and 2025, bringing the total of outstanding share buyback programmes to DKK 64bn ($10bn) from 2022 to 2025. Cosco, too, announced on 6 December that the board proposed a share repurchase mandate up to 10% of its A- and H shares in issue, pending shareholder approval.