Citigroup's report states that the Shanghai spot container freight index fell on a weekly basis on July 12, and futures have been declining since July 5, earlier than the bank expected. The bank believes that the risk-return of shipping stocks has turned negative, as the demand growth has reached the end of a historic 18-month price cycle, and the change of 5% to 11% in supply growth from 2021 to 2026 is limited. Furthermore, the worst scenario of the Suez Canal shipping disruption is to maintain the industry's supply and demand equilibrium.

The bank expects investors to focus on next year's earnings and valuation. The bank predicts that the average core equity return of the three Asia-Pacific shipping companies covered by the bank, namely Cosco Shipping Holdings (01919.HK), Evergreen Marine Corp, and Yang Ming Marine Transport Corp, will decrease from this year's predicted 13% to 5% and 1% in the next two years. The bank expects the average freight rates of the shipping companies to fall annually by 14% and 9% respectively from this year's 24% annual increase to next year and 2026.

The bank downgraded its investment rating for Cosco Shipping Holdings from "neutral" to "sell" and reduced its target price from 14 yuan to 8.81 yuan.