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What A Passing Train Tells Us About The Supply Chain And Prospects For Container Shipping In 2022

Sunrise Analysis profile picture
Sunrise Analysis


  • While walking recently, I noticed Walmart and Amazon containers on a passing train of intermodal containers.
  • This sparked looking at how supply chain chaos from the past year has evolved and where we stand as we go into the new year, 2022.
  • Right now, rates remain high, congestion remains throughout, and it looks like 2022 will be another good year to be in shipping.

Railroad locomotive at dusk

kojihirano/iStock via Getty Images

On a recent evening, while I was out on a walk, a train passed by. This alone isn’t unusual; the tracks have been there for over a century. What caught my eye initially were the following intermodal crates:

Train with amazon prime intermodel containers

Train with walmart and J B Hunt intermodal containers

(Author's own

This article was written by

Sunrise Analysis profile picture
I'm an individual investor. I generally invest for the long term and look for companies at an attractive price that have the ability to grow naturally and who stand to benefit from large trends in the economy. I try to provide insight into how new developments at certain companies will affect their long-term prospects. I also try to share other interesting investment ideas with investors where I think there is significant mispricing or potential for growth.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of DAC either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (24)

TheOldHand profile picture
JB Hunt's from my part of the world and was one of the early pioneers of placing their trailers on flatbed railcars for economical movement. It was always a bit of a pleasure to see them rolling by when I was on the road.
04 Jan. 2022
$40,000 a day to lease ??!!! Yikes !!
Solution to supply chain issues : Bring back manufacturing to the US. We have the land, the infrastructure, the technology, the people. We wouldn’t have to depend on foreign countries for, say, PPE, medicines, etc etc.
@Spisak now if only those third world country's would pay $15-'20-25 a hour like the U.S or lower the CEO. Salarys to only 5 times the annual wage of the working class instead of 50 times maybe they could afford to compete with Asia!!!!
magellan1947 profile picture
Amazon and Walmart are doing their best. Now if they could only open up dedicated Ports of Entry, bypassing LA altogether.
Always had faith in railroads and had bought into UNP, CP, CNI and KSU some time ago. It was interesting to see who was going to get kansas city southern in that bidding war between Canadian pacific and Canadian national. Dumped my "Lionel" years ago, wish i still had it ha ha.
Long Time Running profile picture
Amazon chartered a dedicated train from port of Prince Rupert to Toronto on CN.

More to come.
Sunrise Analysis profile picture
@Long Time Running That's quite a long train, but I suppose it gets the job done.
Long Time Running profile picture
@Sunset Analysis , sailing time is 3 days shorter to Rupert, unloading at the port is daily not taking weeks like it is at LA ports and the train can be in Toronto or Chicago in 4 days.

And plenty of opportunity for backhaul loaded container moves.

Sunrise Analysis profile picture
@Long Time Running Makes sense to me, especially given the holidays and that backlog; smart move.
Author: I assume you took the bottom two photos yourself, and imported the top photo from a website. The top one looks like western Kansas. The bottom two look like western Maryland.
Sunrise Analysis profile picture
@southbuckeye You would be correct in that the top photo is from a library (SA had some copyright issues so they make us pick from a collection) and the bottom two are my own. Not sure about Kansas, but I'll take your word for it. Afraid it's not Western Maryland but rather in the southeast where I took the other two.
@Sunset Analysis thanks for the update.
vantuckman profile picture
This such a straightforward--but profoundly insightful--article; thanks! Yeah, in the end, it's "just boxes." Of course, moving them around the world to exploit demand is much more complex than picking up and delivering boxes. The companies that best resolve that complexity will be richly rewarded as long as the demand lasts. Even if demand slackens, forward contracts written now at the peak of demand can create cash flows for years to come. Long, ZIM, GSL, DAC, among others, enthusiastically. Kirk
Sunrise Analysis profile picture
@vantuckman Thank you for your kind words and I'm glad you enjoyed the article. Shipping is really quite the interesting field.
03 Jan. 2022
Yes. Crazy valuations. ZIM is trading at less than 2021 profits as per company guidance + 2022 net profits. And only $2.50 has been distributed so far as dividends.

I wonder if Option writer's hedging trades or those who buy Options to hedge their positions is playing a part in keeping prices artificially low? It would be interesting to know if/how this kind of trades are affecting share prices. Perhaps someone can throw a light?
@NileD Inefficient markets.
tk77mann profile picture
@Shourey01 ZIM shareholders, since it is based in Israel, have to deal with incredible paperwork on their dividends to try to get the 25% tax withholding reversed. This might be part of the reason why ZIM stock is so cheap.
Damon Judd profile picture
I'm on the shipping train (to coin a mixed metaphor). Long ZIM, GSL, and GOGL. They are paying out some sweet dividends too. Not sure how long it will last but the trend is your friend while it does.
@EnigmaDude Not just dividends, they will have very strong balance sheets too.
Nmm is the biggest bargain in shipping less than 2 pe and 0.4x book value.
@kurtbro Nmm has the biggest crook in shipping, AVOID

Would you give money to Madoff?
Alsome1 profile picture
@energyguy921 don’t know why Kurt is upset at your comment. But you are correct - poor management, but not madoff level.

And no, there is no such thing as a discount to bad management. If there is - please tell me the formula.
@Alsome1 I think it is wrong to call the CEO of nmm a crook, what crime did she commit? What is he implying the ships and the earnings don't exist. AF is creating a juggernaut, get on board.
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