ZIM stock slips as US dockworkers return back to work

Shares of ZIM Integrated Shipping Services (ZIM) are declining on Friday as the US dockworkers' port strike comes to an end. The International Longshoremen's Association (ILA) and the United States Maritime Alliance (USMX) have reached a tentative labor agreement, paving the way for dockworkers to return to their jobs.

This development has diminished the prospect of higher freight rates in the short term, which could have potentially boosted shipping companies' earnings.

Market Domination anchors Julie Hyman and Josh Lipton break down the details.

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This post was written by Angel Smith

Video transcript

Let's talk, Zim integrated shipping services that stock is moving lower today after us dock workers agreed to return to work with a beefed up contract offer nixing the possibility of higher freight rates for now.

Anyway, investors had expected the strike to increase demand for space on container ships and raise freight rates, boosting the ship operators earnings.

So a big picture, listen, the port strike is over and investors in the street are kind of just trying to think through the implications which names benefit, which names don't?

I saw JP Morgan analyst cited telling clients they expect pressure on truckload rate sensitive stocks.

Uh They highlighted, um uh some names JP Hunt was one as well as Ch Robinson and expire international, Washington.

Uh the air freight opportunity has been eliminated here.

They say, yeah, Jp Morgan saying that they had said that they would fade any strength in transport stocks associated with hope of a disruption driven rate spike.

Uh They said that because they didn't think the strike would last very long, um which seemed to be, you know, something that we had talked to various guests about that.

They thought this would be pretty short lived.

And so indeed many of those stocks that had been running up.

Um, you know, now that rally is getting fad and we're seeing um really not just shipping but also those trucking stocks across the board.

Here's one other name, I reached out to Scott Schneberger over at Oppenheimer to hear just what he was kind of telling his clients likes a trucking company XPO um saying yes, there have been some near term uncertainties and he mentions of course the port strike.

But with that now in the rearview mirror says he thinks XB os valuation is compelling here.

Although XBO shares were also down a little bit, they did not get a lift from that view.