The situation was so bad, they even refused to take his body…
For nearly two years, the COVID-19 pandemic shut down much of the global economy, including shipping ports.
Shipping ports are the backbone of the $22.3 trillion international trade industry. Every product you can imagine – medicine, toys, clothes, cars – comes through them.
When they close, not only does it disrupt the transport of goods… but also people.
More than 300,000 people – the population of Pittsburgh – keep this massive part of the global economy afloat.
In one infamous case, a seaman died aboard an Indonesian cargo ship in 2020 that had been stranded at sea for 17 months.
Because of the pandemic, several ports refused to take his body… which ended up stuck on the boat for nearly two weeks.
A spokesman with the International Transport Workers’ Federation said that Singapore eventually accepted the remains.
I understand this is an extreme case… But it highlights just how severely the pandemic paralyzed global supply chains.
For instance, dozens of cargo ships full of everything from toy cars to automobiles sat off the port of Los Angeles as recently as January 2022… only to be told to wait further offshore before they could offload their goods.
Port of Los Angeles Executive Director Gene Seroka said the line of containers extended 60 miles inland to the logistics hub in Ontario, California. “You could see containers piled up everywhere,” he said.
Some boat captains weren’t even patient enough to wait for a spot in a port.
Over 3,130 cargo containers were simply dumped into the ocean. That’s a 400% increase over prior levels.
The snarl of cargo ships at the nation’s ports got so bad, it even contributed to the record-high inflation we’re seeing today.
The New York Federal Reserve noted that a full 40% of the inflation we’ve seen can be attributed to supply chain issues.
Now, the worst of the supply chain crisis is behind us.
Earlier this month, The Wall Street Journal reported that cargo shippers have seen demand drop by one-third. Many ships are sitting idle with empty containers.
This is partly due to the return to business-as-usual as the pandemic has waned.
But there’s another reason these supply chain issues are easing. It’s due to a multitrillion-dollar trend we’ve been following for months now at PBRG.
Today, I’ll show you one way to profit from it…
Made in America Again
The trend we’re talking about is the reshoring of U.S. manufacturing.
Reshoring is the process of returning production and manufacturing back to the company’s home country. So as U.S. reshoring grows, we’ll see hundreds of thousands of jobs come back to American shores.
We call this trend “Made in America Again.” And it will lead to a renaissance in U.S. manufacturing.
Earlier this week, we told you this trend will unleash an estimated $1.6 trillion in the U.S. economy. That’s based on four federal laws enacted over the past two years.
The one that specifically applies to the supply chain is the Infrastructure Investment and Jobs Act.
It allocates $1.2 trillion to build U.S. infrastructure for a new generation of industrial facilities over the next several years.
The act will help U.S. manufacturers produce more products at home. That way they can bypass any future global shipping disruptions.
Here’s the thing…
These companies will need somewhere to store all the goods they make. That means they’ll need more warehouses to hold their inventories.
A lot more…
And that’s where your safe, income-generating opportunity comes in.
You see, demand for industrial properties like warehouses is soaring due to the reshoring trend.
According to commercial real estate firm Yardi Matrix, companies are building about 370 million square feet of new industrial space each year to meet this rising demand. That’s about 1.8 billion square feet through 2026.
Industry leader Prologis estimates we’ll need an extra 800 million square feet of space to house reshored inventories – on top of prior growth projections.
Warehouse space remains low, with vacancies hovering around 2–3%. And executives expect warehouse space to be in high demand regardless of economic conditions.
This is a big part of the reshoring story. But it’s one Wall Street hasn’t awakened to – yet.
How to Profit From America’s Warehouse Shortage
That lack of inventory space will be bullish for warehouse companies over the coming years.
One way to get exposure to this trend is by investing in Prologis (PLD).
It’s a real estate investment trust (REIT) that owns about 984 million square feet of industrial properties, including warehouses, across 19 countries, mainly in the United States.
Plus, it has over 5,000 customers. So it’s well diversified in its revenue mix.
As with most REITs, Prologis has automatic rental increases built into long-term contracts. So the cash flow will continue to rise no matter what the economy is doing.
Thanks to the shortage in the warehouse space, Prologis only has about a 3.5% vacancy rate right now.
Plus, it pays a 2.8% dividend. While not a huge yield, it’s 1.7 times higher than the 1.65% average on the S&P 500.
Bottom line: U.S. companies will spend billions of dollars to reshore over the coming years. Those manufacturers will need lots of space to hold their inventories. That’s bullish for the warehouse sector.
Investing in this sector can provide you with both growth and income in the years ahead as the Made in America Again trend takes off.
Analyst, Palm Beach Daily