How the Shipping ETF Is Charting Its Course

February 7th at 1:00pm by Tom Lydon

france_normandy_ship_1037923_tn The shipping exchange traded fund (ETF) has had its share of rough waters, however, many believe it should find smoother sailing as more raw materials and finished goods criss-cross the seas.

Shipping has struggled across all ship types. Claymore/Delta Global Shipping (NYSEArca: SEA) tracks a cross-section of bulk and tanker ships, so it hasn’t been immune from the downturn, Don Dion for The Street says. [Why Some Ports Are Feeling Spry.]

But there are a couple of things that may work in the ETF’s favor in the coming months:

A bevy of new dryships are expected to hit the market later this year, but it’s too early to determine what impact on the global recovery it would have. But since drybulk shippers transport both raw goods, such as grain, as well as finished goods in containers, some ships will be easier to move. [How Shipping Is Staying Afloat.]
There’s room to grow in rates; while there has been a marked improvement, they’re well off their peak.

Shipping is at the mercy of supply and demand, and as the older ships are docked for good, and as new ships replace them, some type of balance will be attained this year.

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