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There are numerous ways of transporting goods from A to B, but for the world’s best-performing fund managers it would seem the method of choice is the sea, and ships. Perhaps it’s a testament to how shipping, one of the oldest forms of transport, also remains among its most popular, particularly for large freight.
That’s not to say it’s particularly straightforward. As a global sector, shipping is exposed to macroeconomic cycles, geopolitical tensions and shifting patterns of trade, not to mention being vulnerable to rising insurance and fuel costs, particularly the oil price.
Four of the five companies shortlisted in the Emea transportation category of the Citywire Elite Companies Awards, representing top-performing portfolio managers’ top picks from the sector, are in effect pure-play marine shipping businesses. The fifth, also the smallest, provides these services as part of its wider logistics and transport offering.
The winner will be announced at a gala event at the London Stock Exchange on 21 June.
Source: FactSet. PE = price-earnings ratio. PE and dividend yield based on 12-month forecasts
Find out more: Citywire Elite Companies Awards
With its fleet of 36 operated vessels, D’Amico International Shipping (IT:DIS) is the smallest of the marine shipping players. Founded in 1936 by an Italian entrepreneur, the company is headquartered in Luxembourg but listed in Italy on the Borsa Italiana stock exchange.
It specialises in transporting refined petroleum, mainly oil, and has several long-term contracts with oil and gas majors as well as shipping the black stuff on behalf of commodities traders. In this, it is exposed to the energy transition and the world’s changing appetite for fossil fuels.
Last year D’Amico delivered record financial results, generating a net profit of $134.9m on total net revenues of $334.8m, giving it a healthy pre-tax profit margin of nearly 28%. D’Amico argues that its relatively young fleet gives it a competitive advantage, along with its model of taking out options to buy tankers at comfortably below market prices.
D/S Norden (DK:DNORD), a Danish tanker company founded in 1871, ships dry cargoes and petroleum products across the globe. As well as owning and leasing tankers, Norden also pools vessels with other operators and offers port logistics services to customers.
The group recently expanded into new markets, including steel and wind energy cargoes, with the acquisition of Thorco Projects, also based in Denmark. Like d’Amico, Norden delivered record results last year, turning in net profits of DKK 5.2bn ($744m) on revenues of DKK 37.6bn. It operates a total of 542 vessels, including containers.
Spotlight: DSV
The only company that is not a pure play on marine shipping is DSV (DK:DSV), which describes itself as a global freight forwarding company and is essentially a transport and logistics company. Founded in Denmark in 1976 through the merger of nine independent trucking businesses, DSV arranges freight transportation via air, sea, road and rail.
The group, listed in Copenhagen since 1990, has made numerous acquisitions during its history, including most recently agreeing an all-share deal to buy Global Integrated Logistics (GIL) from supply chain logistics specialist Agility. The transaction gave GIL an implied value of $4.1bn and made the combined group a top-three player globally in the transport and logistics sector.
However, unlike most transport companies, DSV operates an ‘asset-light’ model, meaning that it doesn’t own any planes, ships, trains or warehouses and its fleet of trucks is relatively small. Instead, DSV arranges freight movement deals with carriers, ranging from multinational operators to local small businesses.
This enables it to make boasts such as having access to a fleet of 20,000 trucks and six million square feet of warehouse and logistics space without having the heavy drags on capital that owning them would entail.
DSV reports along three business lines: road, air and sea, and solutions, which offers tailor-made logistics. The biggest by profits is air and sea, which accounted for 67% of the total last year, followed by the solutions arm, at 18%, and then road, at 15%. Groupwide, DSV made gross profits of DKK 52.1bn last year on revenues of DKK 235.7bn. The shares, which tumbled during the early stages of the global pandemic as supply chains were brought to a halt, have since rallied by more than 150%.
Gram Car Carriers (NO:GCC) specialises in moving cars by sea and is the third-largest transporter of its kind by tonnage worldwide. The company was founded in Norway in 1982 when Peter D Gram bought his first car carrier; it now operates 24 vessels, 19 of which it owns, with the other five managed. Eleven of its vessels are medium-sized ships capable of transporting up to 5,000 cars at a time.
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The group listed its shares on the growth segment of Euronext’s Oslo Bors in January last year before moving to the main market in December. The lion’s share of its customers are based in Asia, including China, and accounted for about two-thirds of its revenues last year, although it ships vehicles globally.
The fifth company on the shortlist is Hafnia (NO:HAFNI), a Danish shipping firm that operates the world’s biggest fleet of oil and chemical tankers with a portfolio that totals 220 vessels. Founded in 2010, the group was created in its modern guise in 2019 following the merger between BW Tankers based in Singapore and Hafnia Tankers in Copenhagen. BW Group, the parent of BW Tankers, owns 49% of the combined company.
Hafnia, whose Norwegian listing values it at NOK 26.2bn (£1.9bn), owns 117 of its vessels, operating a further 90 and using the remainder as part of shared pools with peers. The group also enjoyed a year of record results in 2022, generating earnings before interest and taxes of NOK 7.3bn on groupwide revenues of NOK 17.6bn.
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