In a research note today, RHB IB said that for the logistics segment, ocean freight capacity shortage is expected to continue, at least until the Chinese New Year, while the air cargo industry anticipates a strong peak season due to holiday demand, with capacity pressure and higher rates expected.

It also noted that despite robust domestic trade performance and the recovery of air passengers, the investment bank believes that sector heavyweights Westports Holdings Bhd and Malaysia Airports Holdings Bhd (MAHB) are now fairly valued.

“Therefore, we prefer logistics players amid the elevated freight rates due to route disruptions across the globe,” it said.

RHB IB added global shipping company Maersk noted that despite high net deliveries and decreasing order books in the industry, low recycling and idling rates indicate that shipping capacity remains fully utilised on most trade routes.

“CH Robinson, a global logistics firm, anticipates that congestion in the Singapore port will persist until the Lunar New Year.

“The congestion has also resulted in shipping lines starting to use nearby alternative ports,” it said.

The investment bank mentioned that while rates are being fully passed on to customers – resulting in a neutral impact on freight forwarders – any significant increase in demand or tightening supply could create opportunities for more favourable pricing for forwarders.

RHB IB said downside risks to the sector’s outlook include a continued slowdown in global economic growth that could paralyse trade flows and a further weakening of freight rates.