Major disruptions to the energy space have had ripple effects that extend down to shipping firms around the world. A gas supply crunch may directly benefit some segments of the shipping industry—specifically, companies that can capitalize on soaring demand for liquefied natural gas (LNG) and related products. At the same time, higher costs combined with the threat of reduced exports could mean trouble.
With LNG benchmark prices climbing, there is growing competition for cargo across longer voyage distances, making for advantageous conditions for many shipping companies. Still, individual risk for these firms may be high, and it's crucial to distinguish between the firms most likely to benefit from a gas crunch and those that could face more negative repercussions. Those investors seeking higher upside potential but greater risk might consider an individual name, while those looking for diversified exposure might consider the Breakwave Tanker Shipping ETF (NYSEARCA: BWET), one of this year's top-performing exchange-traded funds.
