NOL / Container shipping

NOL / Container shipping: Deutsche notes that in view of the recent negative newsflow on the sector (eg. spot rates drifting down despite peak season), a number of major players have started acting supply discipline and have been withdrawing services. i) The G6 alliance will suspend 1 of its 6 Asia-Europe services starting October, ii) the CKYH alliance will implement its winter program starting mid Oct, by cutting 1 of its 5 Asia-Europe services. iii) Maersk has cancelled some voyages lately and will drop 5 sailings during Chinese National Holiday. Deutsche believes this should prevent rates from collapsing in the coming slack season and expects rates to remain above breakeven level in 4Q. The house notes meanwhile, volume on Transpacific (Asia-US) routes have remained strong, and a possible strike in the US east coast could force shippers to re-route their cargo from the east coast to west coast, allowing an opportunity for rate hikes. Deutsche believes container stocks have been hard hit lately. Believes recent stock price weakness could be a good buy opportunity for sector stocks, including NOL (Buy, TP $1.45).