According to the Zhitong Finance APP, China International Capital Corporation (CICC) released a research report stating that recently, domestic container shipping companies' stock prices have generally underperformed their international counterparts, possibly due to: 1) the negative impact of the Red Sea resumption on freight rates, and 2) the U.S. 301 investigation proposing additional charges on Chinese shipping companies and ships built in China, which are two major negative narratives. The uncertainty surrounding the Red Sea resumption has increased, and the 301 investigation may lead major companies in the industry to face rising costs, which may ultimately need to be passed on to customers. Therefore, the relative underperformance of domestic container shipping companies provides a layout opportunity, with a positive outlook on regionally focused (thus not affected by the U.S. investigation) and high-dividend SITC (01308) and Zhonggu Logistics (603565.SH), while also suggesting attention to the undervalued COSCO Ship Hold (601919.SH, 01919), with industry chain targets including Orient Overseas (00316).
<h2>CICC's main viewpoints are as follows:</h2>
The Red Sea resumption may face significant obstacles
According to Clarksons, since the ceasefire agreement in Gaza took effect on January 19, the traffic volume of vessels in the Red Sea has continued to decline. As of February 27, 2025, the overall traffic volume of vessels and container ships has decreased by 5 and 4 vessels, respectively, compared to January 19.
CICC believes that the uncertainty surrounding the Red Sea resumption has increased: 1) Apart from the parties that signed the ceasefire agreement, the decision for shipping companies to resume operations depends on multiple factors; 2) From the perspective of insurance and reinsurance risk assessment, it is necessary to wait for the Joint War Risk Committee to downgrade the risk level of the Red Sea region from the current high-risk area (HRA) rating to reduce or eliminate war risk insurance premiums; 3) The deployment of shipping alliance capacity needs to be coordinated among alliance members to reach a consensus.
Although spot freight rates have continued to decline recently, considering: 1) Long-term contract prices have increased compared to last year, 2) Recently, shipping companies have announced price adjustment policies for March in an attempt to control the decline, the actual effect remains to be seen. Referring to Maersk's profit guidance (historical experience tends to be conservative), the industry may still achieve considerable profits in 2025: compared to the $6.5 billion EBIT in 2024, Maersk's guidance for the EBIT range in 2025 is $0 (resumption mid-year) - $3 billion (resumption by year-end).
The 301 investigation may lead the entire industry to face rising costs, which may ultimately be passed on to customers
According to the official website of the Office of the United States Trade Representative, it has proposed to impose additional tiered port fees on Chinese shipowners, ships built in China, and the orders held by Chinese shipyards based on the 301 investigation. This proposal has not yet been approved and is pending a hearing on March 24.
According to Clarksons data, container ships built in China account for 39% of the global fleet, and orders held by Chinese shipyards account for 73% of the global total. Major shipping companies on the U.S. routes (the top 7 globally) are all affected by this measure at U.S. ports and may face similar operational choices. Deploying non-Chinese built vessels for U.S. routes may face issues of vessel type matching or economic viability, thus having to confront industry-wide cost increases. According to Drewry's estimates, the cost per container may increase by $220-$500/container under different vessel types and routes.
Risk factors
Policy uncertainty risk, geopolitical change risk, global economic growth slowdown

01308

603565

601919

01919

CICC released a research report indicating that domestic container shipping companies' stock prices have recently underperformed their international counterparts, mainly due to uncertainties surrounding the resumption of services in the Red Sea and the impact of the U.S. Section 301 investigation. The resumption of services in the Red Sea faces multiple challenges, which may lead to increased costs for major companies in the industry. Despite the decline in spot freight rates and the rise in long-term contract prices, the industry is expected to still have considerable profits in 2025. It is recommended to pay attention to the high-dividend SITC and Zhonggu Logistics, as well as the undervalued COSCO SHIP HOLD

Zhitong

SITC

Zhonggu Logistics

Cosco Ship Hold

COSCO SHIP HOLD

CICC: The uncertainty of the Red Sea resumption increases, and Chinese shipping companies are expected to rebound