The new coronavirus variant appears to have given a boost to share value of container shipping companies, underlying concerns about further supply chain disruptions. The expectation is that the Omicron strain will add pressure to the already clogged up global logistics system and lead to rush of orders from shippers to avoid more congestions, both of which will help harden ocean freight rates.

Among the global top 10 carriers by fleet size, seven are publicly listed. Their shares have traded higher by between over 4% to nearly 18% since November 26. The variant was first identified in South Africa at the end of November. Leading the valuation charge is Shanghai and Hong Kong-listed Cosco Shipping Holdings, followed by the three Taiwanese firms that have all seen double-digit rises.

One perception from the local analyst community is that China’s exports could potentially benefit from the emergence of the new variant, which is expected to strike a bigger blow to other Asian manufacturing nations owing to their relatively low vaccination rate and loose virus-control measures. “If that happens, we’ll see more orders flow back to China and be shipped from China,” said a Shanghai-based equity analyst. “With the extended logistics chaos, Cosco as a China-based carrier will likely see their earnings surge further.”

Analysis by Alphaliner estimates the 10 largest carriers, including Cosco, would altogether earn $115bn-$120bn in operating profits for 2021, based on forecasts of the companies and its own. “The recent emergence of the Omicron variant could ultimately push these forecasts even higher,” said the consultancy. “The ‘tail’ on the container boom has continually defied forecasts with several players initially predicting that the boom would peter out after the 2021 Chinese New Year,”

While further studies are required, preliminary evidence shows that Omicron is more transmissible than the previous variants and may be resistant to existing vaccines. If proved, from a shipping perspective, this is also seen as a risk that could reignite port closures in China because of the country’s “zero-Covid” policy, the shift of consumption from services to products and the global crew-change crisis. All of these had pushed up freight rates to their previous apogees. “The [Omicron] impact is neutral or positive as previous outbreaks have only extended the stay-home spending spree and exacerbated the bottlenecks,” said Liner Research Services analyst Hua Joo Tan. “I don’t see any negatives.”

There are, however, negative aspects. In addition to prolonging supply chain disruptions, concerns have been raised that Omicron, if taking a more sever turn, could give rise to a repetition of what had happened during the earlier phase of the pandemic, when lockdown measures dampened demand for goods and services. “One is where it creates more supply disruptions and prolongs higher inflation for longer,” said OECD chief economist Laurence Boone. “And one where it is more severe and we have to use more mobility restrictions, in which case demand could decline and inflation could actually recede much faster than what we have here. That could be a scenario where we need more fiscal support at this stage.”

Mr Tan believed that the governments would continue to subsidize consumers should the current economic recovery stall, hence bolster cargo demand. “The politicians have to spend their way out of this mess. What choice do they have?”