Profits are skyrocketing at shipping firms thanks to record-high freight rates. The cost to ship a 40-foot container jumped from $2,000 in 2019 to $20,000 last year, observes Tony Sagami, editor of Weiss Ratings Daily.
That impacted bottom lines in an eye-popping way because the combined profits of global cargo carriers hit a record $150 billion in 2021.
The global economy is picking up steam — and shipping companies have seen a massive increase in volume. The Ports of Long Beach and Los Angeles handle 25% of the inbound cargo containers into the U.S., and business is booming.
In 2021, Long Beach and Los Angeles handled 9.38 million and 10.7 million cargo containers, respectively, in 2021, a 16% year-over-year increase.
And 2022 is shaping up to be an even more profitable year for shippers because of worldwide supply chain bottlenecks. Importers and manufacturers are scrambling to lock in cargo space and signing lucrative, long-term contracts.
So, how can you hop on this shipping bandwagon? Cargo containers are the sweet spot and the two largest in the world are A.P. Møller Mærsk (AMKBY) and Hapag-Lloyd Aktiengesellschaft (HPGLY). Both are worth your consideration. Trading volume for both can be thin, but that shouldn’t make potential investors shy away.
If you prefer the relative safety of an exchange-traded fund, there’s a new ETF — the U.S. Global Sea to Sky Cargo ETF (SEA) — that focuses on the global maritime and air freight industries.
The advantage of SEA is that many of the world’s most profitable shipping companies are non-U.S. companies and in markets (like China) that are difficult, if not impossible, to invest in.
As a result, SEA’s holdings include some of the top freight companies from around the globe. SEA just started trading on January 20 and is a one-stop way to become a global shipping tycoon.