Equity Analysis /

Thailand (Bualuang): Logistics - Robust outlook through 2022

  • Strong shipping earnings through 2022

  • Freight forwarders moving strategically to build businesses

  • Weak outlook for express delivery

Bualuang Securities
22 December 2021

The 2022 outlooks for both shippers and freight forwarders are good. Global economic growth and recovering consumption will boost demand for both dry bulk and container shipping, while vessel supply will remain limited through to at least mid-2022. We also see scope for volume and profit upside among freight for-warders from the new Kunming-Vientiane Railroad. But the express delivery industry is in for a bad year, due to the price war.

Strong shipping earnings through 2022

The post-lockdown global consumption bounce and the expansion of e-tail will boost container shipping demand through 2022. A fast intra-Asia shipping demand recovery will more-or-less offset the effect of slower growth in the US. Port congestion will persist through 1H22, due largely to unusually heavy demand during this recovery phase (especially for durable consumer goods), supporting freight rates. Freight rates may soften HoH in 2H22, if COVID-related supply disruptions ease, but we don’t expect a demand shortfall. We view RCL as a good catch-up play, following in the wake of global shipping companies, premised on a strong outlook and a cheap valuation.