You don’t hear about shipping containers too often… unless there is a mishap.

A few recently went overboard in the North Sea during rough conditions, littering the nearby Dutch islands in light bulbs, toys, furniture, and television sets. Thousands of bags of Doritos once washed up on the outer banks of North Carolina after a container toppled off the deck of a ship bound for Costa Rica.

I bet Tom Hanks’ character from Cast Away would have appreciated that kind of flotsam.

Such instances are rare. These dependable seagoing beasts of burden are responsible for much of the inventory you see on retail store shelves.

They measure twenty feet long, 8 feet wide, and 8.5 feet tall. These heavy-duty steel cubes can securely store up to 62,000 pounds of cargo, about 30 tons.

A single box can hold 50,000 bananas. Or 2,500 pairs of shoes. Or 350 microwave ovens. Or 200 full-sized mattresses.

Wal-Mart alone receives nearly 1 million TEUs (twenty-foot equivalent units) of containerized cargo imports annually. But have you ever given much thought to the boxes themselves?

A Look Inside The Shipping Container Business

There are only three large-scale container manufacturers worldwide (all are state-sponsored Chinese companies). A tight supply shortage has taken shape in the past couple of years, becoming a limiting factor on global trade. So this trio of manufacturers has been running at a record pace to meet demand, driving prices sharply higher.

The cost of a brand new shipping container right off the factory floor peaked at $4,000 last year and still runs upwards of $3,000. Keep in mind that today’s larger shipping vessels (stretching four football fields from stem to stern) can stack 24,000 containers on their deck. That’s roughly $70 million to outfit a new ship with containers, give or take.

No wonder so many shippers find leasing to be a more economical option. Just ask Triton International (Nasdaq: TRTN), which invested $3.6 billion last year to expand its rental fleet. And not a moment too soon. The company remains almost fully booked, with a near-perfect utilization rate of 99.4%.

Over at my premium newsletter service, High-Yield Investing, we’ve held TRTN in our portfolio since November 2020. And during that time, we’ve trounced the broader market.

TRTN’s fleet has expanded to 7 million TEUs. But management has prudently downshifted its purchases after last year’s binge and intends to funnel more cash into share repurchases going forward, increasing its buyback authorization to $200 million.

As it stands, leasing revenues have increased by 17% to $838 million through the first half of 2022. That income has been augmented by “exceptionally high” disposal gains on older containers, with these transactions padding the bottom line. While earnings growth has been noteworthy, I am more impressed by the outstanding 30% return on equity (ROE) over the past 12 months.

While that pace can’t maintain forever, management sees favorable seas through the end of the year and beyond.

Action to Take

Now, if you’ve been following the news, I bet I can guess what you’re thinking…

Hasn’t the situation at the ports gotten better? And haven’t shipping rates softened in recent weeks?

I’ve talked a bit in the past about the issues with the chronic port congestion that has snarled supply chains far and wide. On some busy days, more than 100 ships have been waiting to unload their contents at the busy Port of Los Angeles or nearby Long Beach. Every available berth has stayed occupied around the clock, so newcomers have to drift in San Pedro Bay until it’s their turn to dock.

According to Bloomberg, a combined 375,000 containers could be weighing down those drifting ships waiting for a spot at the terminal. Multiply that by the stats cited earlier, and you get an idea of the incoming cargo hitting our shores each week.

The point is, while things may have gotten a little bit better, this is just the tip of the logistical challenge at hand.

In a future article, I plan to follow all of that cargo inland. But as we speak, dozens of massive vessels are lined up at U.S. ports waiting to disgorge mountains of inventory from these containers. The same will be true again tomorrow.

As for Triton, the moderation of shipping prices along certain routes hasn’t made a dent in the company’s container leasing business. The stock is still trading within hailing distance of its 52-week high.

While shipping can be cyclical, the global economy can’t function without seaborne trade. And trade can’t happen without containers. As the world’s largest lessor of this unsung equipment, Triton remains an attractive long-term holding for income seekers.

P.S. There’s nothing like the feeling of a dividend payout hitting your account. Unfortunately, most income stocks only payout once every quarter…

That’s why I’ve just put together an exclusive presentation that reveals 12 simple stocks that payout every single month.

If you’re tired of waiting around for your income, then I encourage you to check it out. There’s no day trading involved, no crypto, no fancy options plays… Just simply put these 12 stocks in your portfolio and watch the money roll in.

Go here to learn more now.