1/n
A classic economic model of the world assumes demand and supply as the two parameters that determine pricing. Well, here we talk about the third leg that is causing havoc in global trade - logistics, specifically shipping containers.

A thread 🧵explaining the crisis.
2/n
Remember that big ship ‘Ever Given’ getting stuck in the Suez Canal? If that wasn’t enough for the shipping industry, we are now seeing a major global container shortage. This has led to a massive surge in shipping rates across the world.

Let's understand in more details.
3/n
Why are containers important?

Quoting Najib Shah, ex-Chairman, CBIC, “If exports are the lifeline of an economy, shipping containers are the lifeline of exports”. There are ~1.7 cr of these 20 / 40 feet boxes circulating globally, accounting for 85% of international trade!
4/n
Where have they gone?

No, they din't disappeared in thin air. Normally, they would be in constant circulation. But a large chunk are stuck in inland depots, cargo ports or onboard vessels (transpacific lines). The largest shortage is in Asia, but Europe also faces a deficit.
5/n
Why are they stuck? You ask...

5.1
As the world locked down last year, economic activity stopped & shipping containers got stuck at ports. In order to reduce costs, carriers decided to reduce active vessels at sea, which led to the stranded containers not being retrieved.
5.2
Now China opened up first, resuming import-export. So the spare containers available in Asia were used to export to Europe & North America. But, these countries still had COVID restrictions so even these containers couldn't come back early enough.
5.3
As economies started opening up, the demand for shipping containers rapidly increased, but so did the backlog on ports. Altogether, this had a domino effect and we reached where we are today. And it's bad!
6/n
So where are we today?

The shortage is at an all time high and has led to global container prices skyrocketing. The Drewery World Container Composite Index of the 8 major shipping routes released in June shows that container prices have risen almost 300% from an year back!
7/n

As per Bloomberg, the cost to move goods in a shipping container to Europe (Rotterdam) from Asia (Shanghai) has shot above $10,000 for the first time in history. This is putting export and import supply chains under pressure.

bloomberg.com/news/articles/…
8/n
So what is the way forward?

It's going to get worse until we peak next year, if you believe the experts.

Also, chances of situation improving is solely based on the expectation that global bottlenecks are relieved and demand patterns normalize soon.
9/n

The comment section of this tweet from @typesfast (CEO of Flexport) has interesting perspectives on the shipping industry and current situation.

Highlight - Shipping companies are expected to have a bumper profit year.

10/n

How is India impacted from this?

10.1 Overview:

India has an ambitious export target of $1 trillion by 2025. To achieve this, India must aim to have 5% share in world merchandise exports and 7 % in services exports by 2025 (currently 1.7% and 3.5% respectively).
10.2
~90% of India’s trade by volume & 75% by value moves by sea, mostly containers. Freight rates have doubled and even if the exporter is willing to pay higher, containers are scarce.

This is impacting exports of basmati, hand tools, sports goods, sugar, leather & textiles.
11/n

We are interested in evaluating Indian shipping in more details, given these developments.

Top carrier owners:
1. Shipping Corp of India (second by fleet size, but first by capacity/ tonnage)
2. GE Shipping (first by fleet size)

More on this later. Have a good weekend!

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More from @MultipieSocial

5 Jun
1/n
Thread🧵on 🔥 stocks for the week ended Jun 4, 2021.

Category A: Highest returns

1. Large cap stocks (market cap > ₹ 20,000) that generated minimum 6% returns last week:
2/n

Mid cap stocks (market cap ₹ 5,000-20,000 crores) that generated minimum 7% returns last week:
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Small cap stocks (market cap ₹ 1,000-5,000 crores) that generated minimum 10% returns last week:
Read 6 tweets
4 Jun
#RBIPolicy
RBI's monetary policy committee (MPC) outcome is to be announced today at 10 am.

We thought of writing an explainer thread🧵on key RBI Monetary policy tools & their implications. This should help you understand the policy better.

Please RT to educate more folks.
1/n Image
What is Monetary policy?

Monetary policy is the use of instruments under the control of the central bank to regulate:
✅Supply, cost and use of money & credit

With end objective of controlling:
✅Inflation, Liquidity, Balances, Exchange rate and overall financial stability

2/n
What are the tools used by RBI?

RBI (or any Central Bank) has various tools at its disposal to achieve its above-mentioned objectives. We have noted these tools in the left half of image below 👇

3/n Image
Read 18 tweets
30 May
📢Update:
All episodes of our podcast🎙️series 'Breaking Investment Stereotypes' with @singhalrajk are now available on our Youtube channel!

Podcast with Saurabh Mukherjea (CIO, Marcellus) here:

Please subscribe🔔for alerts.

Short🧵on episodes 👇
1/n
Ep. 8
Guest: @Lakshmi1876 (Debt CIO, Kotak AMC)

✍️State of Fixed Income securities in India
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Link:
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Ep. 7
Guest: Alok Jain (Founder, @WeekendInvestng)

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Link:
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Read 10 tweets
24 May
Hello folks!

Take a work break and check out what we found interesting - snippets, reading and video links from last week.

Sharing curated #MultipieWeekly🌱(#3) for you
1/12
1. Banking result season for Q4 has come to a close, so we compared "Total net addition of stressed loans" across Tier I Banks in FY21.

Do you see a surprise?
Data source: Ambit research
2/12
2. We found this table on valuation of agro-chemical players worth highlighting.

At 43x P/E, the mean valuation of the pack is higher than historical averages and inching towards FMCG valuations. Is there Margin of Safety?

Note: EV = MCap + Net Debt (Debt - Cash)

3/12
Read 13 tweets
19 May
Revolution, Digital Gold, Ponzi, Scam..

“Bitcoin” – almost everyone has an opinion on it! Bitcoin, along with other coins in Crypto Land, have seen a steep correction in last few days.

Let's use this fall to simplify and de-jargonize the complicated world of Bitcoin.
Thread 🧵
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1/n
The domain Bitcoin.org was registered in Aug 2008 and the Bitcoin paper (bitcoin.org/bitcoin.pdf) was published on Oct 31, 2008. This started the journey of Cryptocurrency.

Bookmark this visual comic form explanation of the whitepaper: whitepaper.coinspice.io

2/n
Read 22 tweets
17 May
It's a new week and a pleasant rainy morning here in Mumbai!
Grab some tea/ coffee as we share some snippets and readings from the week gone by that we found interesting.
#MultipieWeekly
1/n
1. Interesting slide from CRISIL that depicts the trend of raw material cost inflation across industries and their ability to pass on the cost to end user (pricing power).

2/n
2. General and health insurance companies are seeing a major spike in Insurance claims as a result of larger than anticipated second wave.
Source: Business Standard

3/n
Read 14 tweets

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