2 Shipping stocks to watch as Middle East war disrupts global supply chains

The current war in the Middle East is disrupting global supply chains. Once again the focus is on shipping companies, and their ability to navigate the difficult geo-political situation in that region. Amidst the volatility and rather difficult operating environment in the Middle East, spot shipping freight rates in the key tanker segment have skyrocketed.

Geo-political tensions drive spot tanker freight rates

In the tanker segment like very large crude carrier (VLCC) freight rates, which had averaged $100,000 per day in the December 2025 quarter, had jumped to $120,000 levels per day at the end of January 2026.

Shipping executives highlight that over the last few days, spot freight rates in this segment have crossed $200,000 per day, and even a few instances of $400,000 per day have taken place.

The key factor driving up freight rates in tanker segments is the very high levels of geo-political uncertainty in the Straits of Hormuz and adjoining maritime areas.

In addition, several global insurance companies have withdrawn their coverage for vessels and staff operating in the war-zone area, complicating the situation for shipping companies.

Shipping executives also point out to strong demand for transporting crude oil from Middle East to Chinese ports, with the latter understood to be building its crude oil reserves amidst the current global uncertainties.

In other tanker segments like Suezmax, spot freight rates averaged $ 78,090 per day in the December 2025 quarter, and they had reached $ 96,055 per day at the end of January, 2026. Spot freight rates in this segment have currently surged to over $ 250,000 per day, point out shipping executives.

It is understood that with spot freight rates jumping to very high levels for VLCC vessels, shipping executives are observing increasing demand for using multiple Suezmax vessels, especially on routes from the Middle East to Europe / African ports.

In the smaller dry bulk segment, the Baltic Dry Index averaged 2,159 in Q3FY26, and it was at 2,148 at the end of January 2026. The Baltic Dry Index is at 2,242 levels currently.

Indian shipping companies typically have 70% of their total fleet capacity dedicated to the tanker segment for transporting crude oil and other products. Shipping companies utilise a combination of short and long-term contracts with their customers to maximize their earnings.

To the extent the ships are already available for contract, or coming out of contract shortly, the companies can benefit from this surge in rates. If however, the ships are already tied up in long term contracts, these interim rate movements will have no impact on the companies finances.

Dalal Street turns bullish on shipping stocks

Shipping stocks have bucked the broader downtrend on Dalal Street over the past few trading days, and surging spot freight rates in the key tanker segment have pushed shipping stocks close to their 52-week highs.

Great Eastern Shipping (G E Shipping) was down 1% in early Wednesday trade to Rs 1,311.6, and not too far from its 52-week high of Rs 1,374.5 that was reached on 25 February, 2026.

The government-controlled Shipping Corporation of India was down 2% in early Wednesday trade, and not too far from its 52-week high of Rs 280.4 that was reached on 12 February, 2026.

Q3 FY26 performance – higher tanker freight rates helped shipping companies

G E Shipping benefited from 18% y-o-y rise in crude carrier freight rates in the December 2025 quarter. As a result, its consolidated revenue from operations rose 17.6% y-o-y to Rs 1,454.4 crore in Q3FY26, and a tight check on its costs coupled with a jump in other income helped consolidated net profit rise 37% y-o-y to Rs 812.5 crore in the quarter under review.

Similarly, the government-controlled Shipping Corporation of India benefited from higher tanker freight rates and its consolidated revenue from operations rose 22.5% y-o-y to Rs 1,611.7 crore in the December 2025 quarter. A tight check on its operating costs also helped its consolidated net profit jump 440% y-o-y to Rs 405 crore in Q3FY26.

Investor outlook: Volatility vs opportunity

Investors will be clearly keeping a close eye on spot freight rates in the key tanker segment. However, spot freight rates in the tanker segment tend to be very volatile, and will be influenced heavily by the situation in the Middle East, and US and EU trade policies vis-à-vis Russia, Venezuela and other leading oil producing countries.

GE Shipping in late February, 2026 took delivery of a tanker vessel of about 51,565 dead weight tonnes (DWT), and its total shipping fleet capacity reached 3.25 million DWT.

Shipping Corporation of India has not provided details of its fleet capacity at the end of Q3FY26. At the end of the September 2025 quarter, its results presentation has highlighted a fleet of 58 vessels with gross tonnage of 2.9 million DWT.

Valuation Check: Are shipping stocks still cheap?

GE Shipping has a return on equity of 14.1% in the current financial year, and it is 10.5% for Shipping Corporation of India. 

GE Shipping trades at a consolidated P/E of 8.4 times, and it is 10.2 for Shipping Corporation of India. While in most sectors the above valuations may seem reasonable, however, in a cyclical industry like shipping, a low P/E need not indicate a cheap valuation.

Another metric to look at could be the Price to Book value (PBV). GE Shipping trades at 1.2 times book value, as compared to Shipping Corporation of India which is at 1.4 times. Over the past 10-years, Shipping Corporation of India has traded on the above valuation matrix between 2.1 and 22 times, while for GE Shipping it is 3.9 times and 48 times.

The global shipping industry tends to be quite volatile, despite the steps taken by leading shipping companies to bring stability to operations via long-term contracts. To keep track on how things move from here, add these shipping stocks to your watchlist.

Disclaimer:

Amriteshwar Mathur is a financial journalist with over 20 years of experience.

The writer and his family have no shareholding in any of the stocks mentioned in the article.

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