This is a bit unfair, as I made some purchases this morning in Exodus and only now get to tell you about them. One of them is up 65% from my purchase price and I don’t want you chasing in after me. So take these buys with a grain of salt.
I bought two tranches of shipper stocks, each 5% of total portfolio.
First tranche.
ESEA ($2.10)
EGLE ($5.28)
EDRY ($12.43)
The second tranche.
TOPS ($2.62)
PXS ($1.54)
ANW ($1.29)
Here is the news, Trump pulling out of 144 year old postal treaty that gave China super low shipping rates. Those days are, essentially, over. I believe this isn’t being digested by the market yet and higher prices are just around the bend.
President Trump plans to withdraw from a 144-year-old postal treaty that has allowed Chinese companies to ship small packages to the United States at a steeply discounted rate, undercutting American competitors and flooding the market with cheap consumer goods.
The withdrawal, announced by the White House on Wednesday, is part of a concerted push by Mr. Trump to counter China’s dominance and punish it for what the administration says is a pattern of unfair trade practices. The White House, in a statement, said “sufficient progress has not been made on reforming terms” of the postal treaty and that it would begin the withdrawal process while seeking to “negotiate bilateral and multilateral agreements that resolve the problems.”
The Universal Postal Union treaty, first drafted in 1874, sets fees that national postal services charge to deliver mail and small parcels to countries around the world. Since 1969, poor and developing countries — including China — have been assessed lower rates than wealthier countries in Europe and North America.
Here are the movers in the sector.
Separately, the BDI rates have been steadily improving since 2016. I don’t want to make a fundamental case for the shippers just yet, however. That would make me cringe. This is a trade.
why is increased shipping cost good for shippers?
USPS will now charge more to ship from China. This means that others shippers will be more cost competative, so they will receive more business volume and/or higher prices.
OMG, lol, Trump’s policy is more a Short on Ebay where you can get that stuff shipped from China for cheap vs a Long on a Dry Bulk Shipper. Are they going to stop moving coal and switch over to small ebay boxes cuz the rates are better? This stupid rally in Shippers has been cuz China Govt has been buying…I mean “supporting” the market for the last two nights. Algos don’t factor in that…China isn’t growing bottomline.
This is also a problem for Facebook. Most of the crap advertised there comes from China, and it works because of the free shipping. FB gets a lot of revenue from that and will have a problem replacing it.
The online commerce infrastructure like Shopify and Square will also be affected.