TA Research said the impact on local maritime players would also depend on the developments surrounding the ongoing Israel-Hamas conflict.
KUALA LUMPUR: Local logistics players will likely benefit from the current shipping crisis in the Red Sea.
According to TA Research, this is based on recent observations of freight forwarders and warehouse operators benefitting whenever there is any disruption to global shipping lines.
“The impact is usually positively correlated with the duration and severity of the disruption.
“For port operators, the impact is muted as the decline in revenue due to lower container throughput would be offset by higher storage income,” the research house said.
It noted the impact on local maritime players would also depend on the developments surrounding the ongoing Israel-Hamas conflict.
“We also believe the benefit would spill over to local logistics and warehousing operators if the war continues for an extended period as Malaysian manufacturers are expected to increase storage of raw materials to avoid any production disruption.
“The positive implications have already been reflected in the recent share price performance for logistics and port counters, in our opinion,” TA Research said.
The research house also noted that third-party logistics (3PL) players play a key role in strengthening the overall supply-chain management in the face of trade conflicts and geopolitical tensions.
“What’s important is that the additional cost of having the 3PL service is insignificant when compared to the cost of operation disruptions, which is unbearable,” the research house said.
TA Research said, given the circumstances, it remains sanguine on the longer-term prospects of 3PL operators as far as global risk management is concerned.
“Thus, it is justifiable in ascribing the peak sector price-to-earnings ratio multiple of 16 times in valuing the 3PL sector, which implies a bullish earnings outlook,” it said.
