Red Sea crisis: Markets spike following Houthi missile attacks as concerns grow over impact on global supply chains
20/12/2023
Latest data from leading industry analysts Xeneta shows spot rates in the ocean freight shipping market spiked by 20% since Friday after major shipping liner companies announced they are avoiding the Red Sea amid the attacks by Houthi militia.
"For example, Maersk has stated it does not know when it will be safe to sail through the Bab-el-Mandeb Strait and CMA CGM Group has issued a notice of Force Majeure, which perhaps suggests they do not believe this situation will be resolved in the immediate future.
“We may also see this impact current negotiations between shippers and ocean freight carriers for long term contracts lasting the duration of 2024. Shippers may feel a level of concern that long term rates could follow the spot market and increase dramatically as a result of this crisis" |
Its nearly all option exercises and sales of those exercised shares and they'll be facing some fat tax bills.
Clarkson will continue to outperform this |
It can be hard to gauge sales. He might have a need for liquidity as he could be buying a new house or paying off a mortgage that is about to reset at a higher rate. But on balance I agree that over £1m of share sales at a 7x PE is hardly encouraging. You want to align yourself with a management team betting the ranch at 7x PE. |
Not a great vote of confidence in the prospects of the share price when directors offload plenty at 272! |
I prefer CLarkson |
Someone who did it rather talked about son³ |
What happened is someone took out the 125k buy order at 273p that I talked about earlier with a sell .
Now someone has slapped a hefty new 135k buy order on the books at 270p
Fun and games. L2 is great to see the order book
Clocking off for Xmas now for real ;0). MERRY XMAS |
It's a bit illiquid at present in the run up to Christmas (not uncommon across the market), and the real spread is 268-274p now, just like yesterday the real spread was 273-282p. The 282p close wasn't 'real' so to speak.
Better off seeing where it finishes trading at the end of the day on a spread basis, rather than where these auction trades move the share price
A shameless self plug for any newbies in the background |
So why the drop today? |
8p exdiv confirmed for 4th Jan. Merry xmas and new year all im clocking off |
Correct hpcg - fact is the best brokers builds a relationship with shipowners much stronger than with the broker company however stay with the company rather than a direct broker link due to the scale and depth of the company. However if the broker moves company the shipowner will usually move with the broker.When I ran some marine companies I took this into account a bonus time.It's just a reality of the business model and if played well we all win |
Harry - indeed, for people businesses it is all about pay. There isn't any other cost! You either accept that or invest elsewhere. It is the same for recruitment, law, advertising to name a few. I suspect it is not well understood here, like it is with recruitment. The flip side is that when times are harsh cost is easy to remove. |
Thanks for the insight Harry. |
 A couple of things to flag today
MG, It is the same lark every year, with Clarkson too (although shareholders have not been burdened over the long term. This industry will not change how it pays staff, and broker bonuses (including Gundy) are a huge part of the annual cost structure, it's almost routine. You can try to change it but when so much of the industry is private you are just going to force the top management into the private companies so this is why they say that anyone who speaks to management understand the matters and debates on this. What matters for me is that this sustainably becomes the £18mln targeted normalized EBIT business they are on track to next year.
The Suez Canal situation seems to be worsening, with many other carriers today including Evergreen Shipping and BP also now pausing shipments through the canal and opting for the much longer route around the Cape of Good Hope. I expect this to result in strength in the Baltic Dirty Index (the one that does energy vessels) over the coming weeks. The insurance rates to now navigate the canal is high, and there were more attacks on ships through the Red Sea today
Thirdly, where I am deficient is that I have no insight on the rollover trades! But I am confident Braemar will have a very good 2024! |
 Some strange share activity following the AGM today. Also an interesting comment by the Chairman following the significant number of votes opposing the directors remuneration policy and report.
"I am delighted that all of the board's recommended resolutions were supported today by our shareholders, notwithstanding recommended votes against by certain unregulated proxy shareholder companies. These organisations increasingly operate in a non-communicative universe that shows no interest in, nor takes account of, the rationale behind a board's carefully and purposefully formulated policies which, when explained, most shareholders who take the time to engage with the Company, readily accept. The board's policy remains, wherever possible to not take account of shareholder voting that has clearly followed that recommended voting by unregulated proxy shareholders unless there has been direct engagement from the shareholder with the Company". Nigel Payne
UK Corporate Governance Code - statement regarding voting result.
The board notes that although Resolutions 2 & 3 (directors remuneration report and policy) passed with the requisite majorities, they received more than 20% of votes against the board's recommendation. The board encourages an open and constructive dialogue directly with shareholders and continues to be willing to engage with any shareholder on any relevant topics should they choose to do so. |
I have L2 and there has been a buyer of 125k shares sitting on the book at 273p for the last week. Somebody is keen to buy big at that level |
I think the Braemar Risk Advisory growth is not being well understood by most who are not invested in this company. I have copied what I have written about it
Braemar Securities has quadrupled revenue since FY21
The strategy has also involved developing and bulking out ancillary services for chartering, like Braemar’s Securities offering which has quadrupled over the last 3 years to >10% of revenues, growing from £3.3mln in FY21 to £17mln in FY23 and growing a further 20%+ in the first half of FY24. This is a major opportunity for Braemar, with the securities business really only present in the UK at the moment, but which is a platform that can be rolled out more globally over time. The EU ETS regulation changes coming soon will an additional stimulus to growth, by further allowing Braemar to provide a service for shipping clients to manage the physical purchase of carbon credits in the EU. It would not be surprising to see Securities as a close to £50mln revenue business within 5 to 7 years. I asked Braemar this exact question on their half year presentation call with retail investors: can Securities get to £50mln in 5-7 years? Their answer was that their opportunity set in the UK, Europe, Singapore and other countries can support that ballpark number.
The brokers have BMS on only 7.5X what is basically next year's PE, and on my more optimistic forecasts I have it only just 6.0X what is basically 2025 PE |
The surprising way the Panama Canal backlog will affect the UK
he Panama Canal is meant to be smooth sailing for the world’s cargo. In normal times, 38 ships a day pass through the artery connecting the Atlantic and Pacific oceans — but the worst drought in 50 years has crimped the canal’s intricate lock system and reduced the daily passages to about 22. The result is that dozens of ships are crowding together on both sides of Panama, sometimes waiting more than three weeks for passage.
The obstruction has largely prevented liquefied natural gas (LNG) produced on the US Gulf coast from heading west to energy-hungry China. Unable to head to their usual markets, producers are sending their ships east to Britain and Europe instead, where LNG is used to generate electricity. Henning Gloystein, who directs the energy, climate and resources centre of think tank the Eurasia Group, said: “It has contributed to lower gas prices in Europe, [which] is getting cargoes at a discount because the Americans can’t sell their stuff elsewhere.”
It is not only the Panama canal that is disrupted. On Friday, two of the world’s biggest shipping companies — Denmark’s Maersk and Germany’s Hapag-Lloyd — announced they would be suspending all journeys into the Red Sea after attacks by militants on ships that they believed were destined for Israel. It is a major route to the Suez Canal, the world’s other major trade artery. Any blockages to the Suez could isolate Asia even further, pushing more ships to European markets.
Complete article: |
Shipping is being diverted from the Red Sea now: All good for brokers and vessel owners. |
Great summary Harry Davis, cheers.
Newly tipped here too FYI (subscription only):
"Braemar – a recovery Buy?...
By HotStockRockets | Friday 15 December 2023
Shares in company describing itself as “a leading provider of expert investment, chartering and risk management advice to the shipping and energy markets”, Braemar (BMS) had recovered to above 300p as recently as June this year and reached 340p last year, before in July this year the shares were suspended on an investigation of a historical transaction. They though returned from suspension last month and we suggest now have further recovery potential from a 280p offer price.
etc" |
Excellent analysis Harry very informative. Please keep up the good work |
I would also mention Clarkson is a buy as well. It benefits from the same trends as Braemar and as the market leader may see funds inflow sooner. |
Shortrun factor but the Houthis are now saying this weekend that they are banning the passage of any ships that look like they are going to Israel through the Suez. We are going to see more ships being diverted around the Cape of Good Hope to avoid any risk of conflict which may turn out to be further good news for shipping rates and shipbrokers as travel times lengthen and ship availability falls |
@Studentinvestor13, thank you
@essential, read the "The growth agenda continues" part of my review in the link above |
Customisable watchlists with full streaming quotes from leading exchanges, such as LSE, NASDAQ, NYSE, AMEX, Bovespa, BIT and more.
Hot Features
Premium
