The past few years have been rough on the shipping industry. This has led to what some within the industry have deemed “Bloody Friday”. What exactly is going on and how will it impact the shipping industry moving forward? Here are some of the things you need to know about shipping stocks hitting multiple-year lows.
What Is “Bloody Friday”?
In early July, shipping stocks took massive hits across the board. This led shipping analyst J. Mintzymer to label this event as “Bloody Friday”. The drop in shipping stocks comes amid fears and speculation of a global recession, especially after a US government report showed a two-year low in manufacturing.
It had been a difficult few weeks for shipping stocks in the leadup to Bloody Friday. However, product tankers were among some of the few industry segments to hold up well despite the overall fall in the shipping market. For example, Scorpio Tankers was up 165% since the start of 2022, Ardmore shipping was up 105%, and TORM was up 71%. However, each has fallen more than 10% since Black Friday.
The Drop in Cruise Ship Stocks
The shipping industry wasn’t the only one that saw a sharp decrease in stock prices. Since the start of the pandemic, the cruise ship industry has taken a massive hit. That continued during the week of Black Friday. Carnival Cruise Lines fell more than 15%, nearing their 2020 COVID-19 low. This came after Morgan Stanley, a banker/analyst, warned that the company’s debt load, rising costs, and a possible recession could lead to a worst-case scenario for Carnival.
While the cruise ship industry may have been hit the hardest, container and bulk stocks also took a large hit. Zim Integrated Shipping dropped 9.5%, Genco Shipping dropped 8.5%, and Eagle Bulk Shipping dropped 8.46%. The harsh reality is, that anything stock related to the shipping and transportation industry, has taken a hit.
Weakened US Manufacturing
One of the reasons for stock crashes is weakened US manufacturing. A measure of US manufacturing activity weakened in June to a two-year low as new orders are restrained by lingering supply constraints and softening in demand. The Institute for Supply Management’s gauge decreased to 53 in June from 56.1 in May. Keep in mind, readings above 50 indicate expansion. This 53 number is lower than most economists’ estimates, which had a median projection of 54.5.
The index of new orders dropped nearly 6 points to 49.2, which is the lowest result since May 2020, when the global economy was dealing with the initial tidal wave of the COVID-19 pandemic. Experts believe that shrinking orders have been caused by a dip in consumer spending. This dip is likely due to a meteoric rise in inflation, as consumers are cutting spending, especially in areas they feel unnecessary.
How Will This Affect Your Business?
If you’re a business owner or manager, you’re probably wondering how all of this information affects you. How will a massive drop in shipping stocks affect your business? As you can imagine, any turbulence in the shipping industry can have a massive negative impact on your business, especially if you rely on time-critical shipping.
This is why working with someone to help with your shipping logistics can be beneficial to you and your business. At Trifecta Transport, we will deal with the hassle of the shipping industry so you don’t have to. We have decades of experience dealing with the turbulence of the shipping industry, so we know the best course of action when times get tough.
Reach Out to Us Today
If you are in need of help with your logistics needs, our team here at Trifecta Trans is here to help. We offer a wide range of services and will work with you every step of the way to ensure your logistic needs are met. Contact us today to find out what it is we can do for you!