A container shortage amid rising global demand has driven shipping costs up substantially. The trend is likely to continue as the worldwide market soars with major economies emerging from recession. And we think this supply/demand imbalance should help shipping companies ZIM Integrated Shipping Services (ZIM), Matson (NYSE:MATX), and Danaos (NYSE:DAC) generate higher profits in the coming months. Let’s discuss.Global supply chain bottlenecks amid soaring demand and a container shortage have caused a substantial increase in shipping costs. In addition, the Suez Canal blockage earlier this year exacerbated the container shortage in the first half of 2021.
According to Drewry Shipping Consultants, the average cost of chartering a 40-feet steel container from Shanghai to Rotterdam is currently 547% higher than the past five-year seasonal average. The rising shipping costs are expected to contribute to increasing inflation.
Analysts expect shipping costs to rise further in the coming months as global demand increases with the fast-paced economic recovery. This should allow shipping companies to generate higher profits as oil prices remain under pressure. Thus, we think popular shipping companies ZIM Integrated Shipping Services Ltd.(ZIM), Matson, Inc.(MATX), and Danaos Corporation(DAC) should grow substantially in the near term.