Submitted by n1ck90z t3_124eypt in wallstreetbets
Comments
banditcleaner2 t1_je085ap wrote
visual mod writes better analysis' of graphs then seeking alpha. lets invest in this shit boys
[deleted] t1_jdz5l5c wrote
[removed]
PeteyMcPetey t1_je0029o wrote
That's nuts.
Two years ago, I was trying to ship a single 20' container from Kuwait to the east coast and nobody would touch it for less than $30K.
As for China specifically, I do remember reading somewhere that the average wage in China now is higher than Mexico, so aside from projects that require massive amounts of manpower (i.e. Apple), it just isn't as cost effective to build things in China anymore, even with shipping costs dropping.
riaKoob1 t1_jdz1all wrote
They are also shipping a lot more to east coast since west cost port are not as reliable.
There is also high inventory but it is alleviating fast.
peter5300 t1_je0m6zq wrote
- shipping = seasonal
- container prices now have their ‘normal pattern’ again.
- 2020/2021/2022 due to COVID, harbour closings,…. It were exceptional circumstances and exceptional prices. Look at 2015 - 2020 and you will see the ‘normality’ again in 2023
- at these levels container companies are still making money, even in the low-price season (winter)
- I did not understand the question. Who makes the profit? There is no ‘extra’ profit. If you take longterm, you pay more then spot today, but less then spot in 5 months. You pay average.
- want to invest in container business? ZIM shipping holds around 30$ cash per share, and the share price is 22$. And they are profitable. And they pay strong dividends. A no-brainer!
n1ck90z OP t1_je0ojgx wrote
Shipping costs went higher during covid and so did consumer prices for chinese products as consequence. Now data shows shipping costs are down to precovid levels but consumer prices are not. This means that the difference in shipping price became profit for someone. The question was which companies are taking these profits because i would expect them to do well in the short/mid term
Environmental-Ad4090 t1_je1r6id wrote
Shipping is just one factor in the supply chain you have to look at the whole supply chain
autixstic t1_jdzdgy9 wrote
Whats the message here...is tanker gang making a comeback??
OffByOneErrorz t1_je1e71d wrote
Shipping Costs Go Up -> Retail Prices Go Up
Shipping Costs Go Down -> Retail Prices Go Up
Shipping Costs Remain Flat -> Retail Prices Go Up
Love consistency.
konstantinos2000 t1_jdzgh0h wrote
What does spot price exactly mean?
Eco_guru t1_jdzi23x wrote
It means that it’s the cost of a one time move at current market rates that a person or company would pay, basically the cost to book with no discounts for volume or contractual rates
KutteKiZindagi t1_je0avvn wrote
On the spot price. Lets assume you want to move some shit from china to US today. You get the quoted price and you pay to move it.
Long term contracts are for regular shippers to ship in future.
The shipping price is in "contango" which means the long term contract price is higher than current price. Which means the market expects the shipping price to rise in the future.
Equivalent-Half-964 t1_je38c2v wrote
It does not mean that the market expects the shipping price to rise in the future, that's not what futures do. It means the spot price is carried at a positive rate into the future, as a no-arbitrage price, accounting for costs and income in holding the contract.
VisualMod t1_jdz10uc wrote
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Professional-Emu6013 t1_jdz1pyc wrote
Which app are ya using?
[deleted] t1_jdz2x15 wrote
[deleted]
notaredditor_93 t1_jdz306q wrote
Just a pre post covid spike!
n1ck90z OP t1_jdz52cs wrote
I know, but prices did not come down so someone is taking the profit
TheSilverOak t1_jdz6w44 wrote
>prices did not come down
Are we looking at the same graph?
It's normal for long-term contracts to trail spot prices. This is common in a wide range of markets
n1ck90z OP t1_jdz7qli wrote
I mean the imported goods prices did not come down for the consumer
SateliteDicPic t1_jdzgis7 wrote
Prices for the consumer will not fall unless the economy enters a deflationary phase which economists tend to view as negative.
Consider an example. Back in or after the GFC oil spiked higher and airlines added fees that were implemented so they could “survive.” All those fees are still being charged today (baggage fees, etc) to my knowledge. Once an industry manages to condition consumers to certain fees, price points, etc they will not roll those changes back until forced to by market conditions or regulation.
DenuvoSuks t1_jdzdky6 wrote
so it got back to normal, the time to make money going up or down is over, what is the relevance here?
Pestelence2020 t1_jdzvrdb wrote
Probably the issue is why are imported products from China not going down in cost as a result in the reduced overhead costs associated with shipping…..I.E. are sellers pocketing the savings from shipping cost reduction but not reducing the prices of their goods for sale.
This analysis forgets the inherent delay associated with these kinds of inputs. Prices won’t fall until competitive pressures make them. If everyone importing a certain widget is selling for a stable price of $x, why would they reduce that price unless demand falls to a level they’re forced to consider $x-y = more sales (and more profit)?
DenuvoSuks t1_jdzy3ao wrote
i'm tired of saying this, no one wants to see prices going down, once inflation gets them up it's really hard to ever see a decrease unless things get really bad. This is an historical fact.
If you can sell less quantity for the same margin, profits go up.
Pestelence2020 t1_je165lj wrote
Agree with your premise 100%
n1ck90z OP t1_jdzzx94 wrote
My point here is exactly that this is short/mid term bullish for companies pocketing this money. The question is which companies are pocketing the most. Depends also on how much shipping costs weight on the goods value
mxk2020 t1_je07set wrote
Wen bull whip? Hee yah
mazarax t1_je0s8y5 wrote
If demand for shipping goes down more than this, it means globally, we stopped buying stuff.
All those empty ships will mean a world economy that grinds to a halt.
Good for the planet, I guess... less CO2 emissions.
Grizzlymon t1_je0wokb wrote
Lower shipping rates aren't creating a windfall for anyone. Sales volume is down for everyone, this is just providing balance. Rates can't stay high on softened demand. The companies paying the shippers aren't generating the revenue they were a year ago.
Matt2_ASC t1_je1zuxb wrote
Was inflation transitory all along?
NerdJoshua t1_je2s9dv wrote
Told you regards for a while. Retail has been outperforming cause of this.
1uc1f34 t1_je39bsz wrote
funny, my taobao haul is still twice as expensive to ship as pre covid. interesting
sQGNXXnkceeEfhm t1_je3auv8 wrote
Lmao what? That’s literally how spot vs contract pricing works, one is on a lag
bigoptionwhale777 t1_je3hju9 wrote
Everything's infinitely deflationary
cobblecreekroad t1_je4v72g wrote
What it means is if you hold shipping stocks, get the fuck out now. It’s dropping on a weekly basis.
VisualMod t1_jdz117o wrote
This is interesting data. It shows that ocean-shipping rates from China to the U.S. West Coast are falling, which could be due to a number of factors such as increased competition or lower demand. This could have implications for businesses that rely on shipping goods from China to the US, and it will be worth monitoring this trend in the future.