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The Supply Chain Is Broken, but There Are Huge Opportunities in Fixing It

My daughter calls it the “doll-set kitchen.” She thinks it’s funny because I cook her food in a variety of miniature mismatched appliances spread across my countertops.

A variety of kitchen supplies are displayed on a wooden surface.

Source: nehophoto / Shutterstock.com

It all started when I moved into a new home, started remodeling the kitchen, and ordered custom appliances… at the end of 2020.

I’m still waiting, nearly a year later, to actually get those appliances delivered.

Factory closures, shipping containers stuck at port, and the notorious chip shortage have all contributed to my missing appliances.

All in all, I’m not that concerned… things could be worse. It just looks funny to have huge spaces in my kitchen where the oven, microwave, and dishwasher should be.

My story isn’t unique. An October Wall Street Journal article covered the appliance shortage and delays. People across the United States — and around the world — are feeling the supply-chain breakdown.

It’s not just appliances… it’s everything. Everything from basics like food and clothing to the toys Santa puts under the tree…

As the holiday season fast approaches, things are bound to get worse.

Nearly every single media outlet is sounding the alarms over the logistics nightmare now unfolding at shipping ports.

As a result of the ongoing pandemic, our global supply chains are completely out of whack. And the trickledown effects of this imbalance are starting to show.

While there are numerous issues, one of the big problems in the U.S. is goods are stuck on ships sitting off our coasts. At the ports, where supplies are supposed to be offloaded and sent to consumers, there is a container traffic jam.

One of the major hang-ups is that there are not enough trailer chassis for trucks to move the shipping containers out of the port facilities. As detailed last week in Wall Street Journal report, tens of thousands of trailer chassis are just sitting in random storage yards throughout the country.

Again, there are many other problems (including labor shortages)…

But this whole crisis highlights a very interesting opportunity for entrepreneurs and investors.

With Crisis Comes Opportunity

After all, when entrepreneurs can find solutions to major challenges, their efforts are usually rewarded in enormous sums of money. (And that means that their investors reap the rewards as well!)

That’s exactly what is happening in the logistics industry. Private investor capital is starting to pour in…

By the boatload…

Encinitas, California-based Flock Freight just closed a $215 million funding round, which was led by the world’s largest venture capital fund: SoftBank.

Flock Freight says its technology optimizes shared truckloads to “improve on-time delivery, reduce damage by 100X, and eliminate your freight’s carbon footprint.”

This new funding round for the logistics tech company brings its valuation to $1.3 billion, which means Flock Freight is now a “unicorn” (that, is a privately held startup valued at over $1 billion.)

As a private investor, you may be thinking, “I’m too late to the game here… all of the money has already been made!”

But the truth is that logistics is ripe for much more disruption by tech-enabled platforms. And it’s likely that the industry will see some enormous transactions in the private market over the coming years.

That spells HUGE profits for investors who want to back privately held logistics companies right now.

For example, the Freight unit at Uber Technologies (NYSE:UBER) has publicly stated that it is looking to acquire private logistics companies to increase Uber’s on-demand delivery footprint.

Meanwhile, other private logistics companies, like Transfix Inc., have announced plans to go public. That will line the pockets of their early investors very nicely.

And it’s not just fancy tech companies that are looking to acquire new logistics tech.

J.B. Hunt Transportation Services (NASDAQ:JBHT) has been around for decades and trades on the Nasdaq. The trucking giant just announced its third-quarter results: “Net profit climbed 59% in the third quarter from a year earlier to nearly $200 million, while revenue rose 27% to $3.14 billion.”

That means J.B. Hunt likely will be sitting on a mountain of cash within the next year… cash that it can use to go out and acquire private logistics companies (which private investors should be looking to invest in).

Like I said before… don’t worry about being late here.

At a recent supply-chain forum, Prologis CEO Hamid Moghadam said, “I think it’s going to take a while [before we see a solution]. If I were going to bet on a date, I would say middle of 2023, end of 2023.”

That means there is still plenty of time and room for other privately held logistics companies to step up with tech solutions.

The next unicorn logistics company may not even have been founded yet. As a private investor, that means you could have opportunity to get in on the ground floor.

This is a big trend I am tracking. Keep an eye out. I’ll share updates as the story develops… and profit opportunities as they come along.

Regards,

Cody Shirk
Editor, Venture Capital Digest

On the date of publication, Cody Shirk did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

By focusing on megatrends that will shape the future, Cody Shirk uncovers generational wealth in the private investing space. To make sure you never miss Venture Capital Digest, click here to subscribe.


Article printed from InvestorPlace Media, https://investorplace.com/venturecapitaldigest/2021/11/the-supply-chain-is-broken-but-there-are-huge-opportunities-in-fixing-it/.

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