Norway has a long seafaring tradition, and Oslo Børs is among the world’s most important exchanges for shipping companies. You will find shipowners in almost every segment, many with international operations and headquarters in Oslo, Bergen or abroad.
Shipping stocks can deliver very high returns in good periods, but also large falls. To understand them, you need to understand how the freight market works.
How freight rates are set
Supply: the number of ships
Ordering and building a new ship takes several years, so the supply of ships changes slowly. It grows as newbuilds are delivered from the yards and shrinks when old ships are scrapped. The order book, how many ships are on order, is an important signal of how supply will develop.
Demand: volume and distance
Demand depends on how much needs to be shipped, and how far. The latter is often called tonne-miles. When ships have to sail longer routes, for example because an important waterway is closed or unsafe, each cargo ties up the ship for longer. The effect is the same as if the fleet shrank, and it can push rates up sharply.
Spot market and time charter
A ship can be hired for a single voyage in the spot market, or for a longer period at a fixed rate, called a time charter. Shipowners with high spot exposure get the full effect of rate changes, up and down. Owners with long contracts have more predictable earnings.
The segments on Oslo Børs
| Segment | What is carried | What mainly drives demand |
|---|---|---|
| Tankers (crude) | Crude oil | Oil production, trade routes and stockbuilding |
| Tankers (product) | Petrol, diesel and other refined products | Refinery capacity and trade patterns |
| Dry bulk | Iron ore, coal, grain and other commodities | Industrial production, especially in China |
| Containers | Finished goods in containers | Global trade and consumption |
| Car carriers and ro-ro | Cars and rolling cargo | Car production and exports |
| Gas | LPG, LNG and ammonia | Energy trade and petrochemicals |
| Chemicals | Chemicals and specialty products | Industrial production |
Examples of shipowners
Tankers: Frontline operates large crude tankers, and Hafnia operates product tankers.
Live prices from the latest close. Signals are model-based, not recommendations.
Dry bulk: 2020 Bulkers and Himalaya Shipping operate large bulk carriers that carry iron ore, among other cargoes.
Live prices from the latest close. Signals are model-based, not recommendations.
Containers, cars and gas: MPC Container Ships charters out container ships, Wallenius Wilhelmsen and Höegh Autoliners carry cars and rolling cargo, and BW LPG operates large gas carriers.
MPC Container Ships ASAMPCC29.22 NOK+1.0%BUY
Wallenius Wilhelmsen ASAWAWI172.60 NOK−0.2%SELL
Höegh Autoliners ASAHAUTO184.00 NOK−0.3%BUY
BW LPG LimitedBWLPG250.80 NOK−0.6%BUYLive prices from the latest close. Signals are model-based, not recommendations.
Chemicals: Odfjell and Stolt-Nielsen operate chemical tankers and terminals.
Live prices from the latest close. Signals are model-based, not recommendations.
What the cycle means for the shares
Shipping stocks are often priced on expected rates over the next few years, not just today’s earnings. Shares can therefore start falling while rates are still high, if the market expects many new ships to be delivered. Likewise, shares can rise in bad times if the market sees an improvement ahead.
Many shipowners are also valued on net asset value, the market value of the ships minus debt. Shares trading far below or above this value can say something about how the market views the outlook.
Dividends from shipowners
Many shipowners on Oslo Børs aim to pay out most of their profit as dividends, often every quarter. In strong markets the yield can become very high. But when rates fall, dividends fall too, often quickly. A high past dividend therefore says little about what you will get next year.
Other things to follow
- Environmental rules: New emission requirements can make older ships less competitive and affect how quickly ships are scrapped.
- Geopolitics: Sanctions, conflicts and closed waterways change trade routes and distances.
- The dollar: Shipping is priced in dollars, and most shipowners report in dollars.
- Debt: Ships are expensive, and high debt makes a shipowner vulnerable in weak markets.
Next steps
- See the Oslo Børs price list
- Read about dividend stocks and dividend traps
- Check the diversification of your portfolio