CICC: The tight supply of small container ships in the Asia region is expected to continue, optimistic about COSCO SHIPPING Energy and others

According to the Zhitong Finance APP, China International Capital Corporation (CICC) released a research report stating that the oil transportation sector is undervalued, with companies in the sector having elasticity on the upside and dividend support on the downside. It is recommended to pay attention to left-side opportunities, optimistic about the seasonal elasticity of marginal supply and demand improvement, and to focus on COSCO SHIPPING Energy (01138) and China Merchants Energy Shipping (601872.SH), while keeping an eye on China Merchants Jinling (601975.SH). The container shipping sector emphasizes the allocation value of high-dividend targets, with high dividend ratio private enterprises like SITC (01308) and Zhonggu Logistics (603565.SH) benefiting from both short-term (the second half of the year during the Asian and domestic trade peak season) and long-term (limited supply of small vessels) logic. COSCO SHIPPING Holdings (01919) provides support through its balance sheet; dry bulk shipping rates have been strong recently, and attention should be paid to subsequent demand-side improvement catalysts (peak season demand and the commissioning of the Ximangdu project), focusing on the small bulk shipping company Pacific Basin Shipping (02343).

CICC's main viewpoints are as follows:

Industry Status

This week's freight rate update: Container shipping rates on the US route rebounded, while European routes declined. The SCFI freight rates for the US West, European routes, and Southeast Asia increased/decreased by +17.0%/-11.2%/+5.3% week-on-week, while the domestic trade PDCI index decreased by -1.01% week-on-week, up +14.77% year-on-year; oil transportation VLCC rates decreased by -8.1% week-on-week, up +91.0% year-on-year, and MR rates increased by +15.6% week-on-week, up +54.8% year-on-year; the dry bulk BDI index increased by +7.0% week-on-week, the BCI index increased by +8.2% week-on-week, and the BSI index increased by +4.3% week-on-week.

This week's focus: Tight supply of small container vessels in the Asian region is expected to continue

The overall supply of small vessels is tight, with the Asian region accounting for about 42% of capacity. In the past two years, new capacity has mainly been used for Red Sea detour branch line support, with limited new supply in the Asian region. According to Clarksons, the annual new supply of small container vessels over the next three years is only 1-2%, while the proportion of vessels over 25 years old has reached 11.2%. Although some shipowners have recently begun to increase orders for small vessels, most new ships will not be delivered until 2028 and beyond, which will not have a significant impact on small vessel capacity over the next three years. According to Alphaliner data, as of August 2025, the capacity of 3,000 TEU small vessels is mainly distributed in the Asian region, the Middle East/Indian subcontinent, and Europe, accounting for 42%, 15%, and 14%, respectively. Compared to the end of 2023 (before the Red Sea detour), the capacity of small vessels below 3,000 TEU has increased by 8.5%, with new capacity mainly distributed on routes in the Middle East and Indian subcontinent, and Europe, used for shipowners to detour around the Red Sea for branch line support, while the capacity of small vessels in the Asian region has only increased by 2.2%.

The capacity in the Asian region is mainly concentrated in larger global operating shipping companies, with an average capacity scale of 3,000 TEU and a high chartering ratio

According to SITC brokerage data, as of the end of June 2025, the top ten shipping companies in the Asian region account for about 70% of capacity share, with the exception of SITC (capacity share of 4.1%, ranked ninth), all being globally operating shipping companies. The vessels deployed in the Asian region are relatively large, with individual vessel capacity above 3,000 TEU and a high chartering ratio. It is believed that globally operating shipping companies in the Asian region mainly use their capacity for branch line support to main lines, which creates a competitive mismatch with SITC, which focuses on a network layout in the Asian region and primarily operates with small vessel capacity Risk

Geopolitical change risk, significant slowdown in global economic growth