The Busiest Port in America: Los Angeles
U.S. e-commerce grew by 32.4% in 2020—the highest annual growth rate in over two decades. Such rapid growth has resulted in many more goods being imported, leaving America’s western ports completely overwhelmed.
To help you understand the scale of this issue, we’ve visualized the number of containers waiting at sea in relation to the Port of Los Angeles’ daily processing capacity.
Stuck at Sea
As of November 2, 2021, the Port of Los Angeles reported that it had 93 vessels waiting in queue. Altogether, these ships have a maximum carrying capacity of roughly 540,000 containers (commonly measured in twenty-foot equivalent units or TEUs).
On the other side of the equation, the port processed 468,059 import containers in September (the most recent data at the time of writing). Because the port does not operate on Sundays, we can conclude that the port can load roughly 18,000 containers each day.
That capacity seems unlikely to reduce the congestion. Over a two-week timeframe in September, 407,695 containers arrived at the Port of Los Angeles, which averages to around 29,000 containers arriving each day.
|Figure||Approximate Number of Containers|
|Daily import arrivals||29,000|
|Daily import capacity||18,000|
|Daily increase in backlog||11,000|
What’s Being Done?
Solutions are needed to prevent the backlog from causing massive economic harm. In fact, analysts believe that up to $90 billion in trade could be delayed this holiday season.
In October, the Biden administration announced a deal to expand operations at the Port of Los Angeles, enabling it to run 24/7. The port also announced it will begin charging carriers for every container that sits idle over a grace period. While only temporary, this plan has drawn criticism for its unclear objective.
“The fee is on the ocean carrier, but the control over when the cargo is to be picked up sits with the cargo recipient. Having the ocean carrier pay more does nothing to encourage the cargo interest to pick up the cargo.” – World Shipping Council
Regardless of the outcome, more permanent solutions will be required as online shopping continues to gain popularity.
AWS: Powering the Internet and Amazon’s Profits
Amazon is best known for its sprawling ecommerce empire, but three-quarters of the company’s profits actually come from cloud computing.
AWS: Powering the Internet and Amazon’s Profits
The Amazon growth story has been a remarkable one so far.
On the top line, the company has grown every single year since its inception. Even in going back to 2004, Amazon generated a much more modest $6.9 billion in revenue compared to the massive $469 billion for 2021.
Most of these sales come from their retail and ecommerce operations, which the company has come to be known for. However, on the bottom line, the source of profit paints a completely different picture. That’s because 74% of Amazon’s operating profit comes from Amazon Web Services (AWS).
Here’s a closer look at the financials around Amazon and AWS:
|Year||AWS Operating Profit ($B)||Total Operating Profit ($B)||AWS % of Operating Profit||Revenue ($B)|
Ultimately, the data suggests that the cloud business has been, and possibly will always remain, a higher margin business and consistent profit center in comparison to ecommerce and the physical distribution of goods.
A Glance at AWS
AWS is Amazon’s cloud computing service that provides the critical infrastructure for an assortment of applications like data storage and networking. With this, they help fuel over a million organizations including businesses like Twitter and Netflix and even both the U.S. and Canadian Federal Governments.
Here are some other notable entities and the monthly payments they’ve made towards AWS:
|AWS Customer||Monthly Payments ($M)|
Source: Continho (2020)
Based on these monthly figures from 2020, AWS collects $1.3 billion in sales a year just from these 10 customers, while raking in $62 billion of revenue overall. Moreover, this makes them the leader in the competitive cloud market.
In an industry worth an excess of $180 billion, Amazon’s 33% market share position exceeds both Google and Microsoft (Azure) combined. Their market share also surpasses the bottom six shown on the chart combined, who are formidable tech giants in their own right.
The Future of AWS?
AWS has been a cash cow for years and there have even been rumors of an Amazon split up, where AWS would spin off as its own entity. It’s believed by some that if the cloud segment of the business separates, it will be seen as a pure play on the cloud industry and will be awarded a higher valuation multiple by the market.
One thing is for sure, from the perspective of profits, Amazon could be better be described as a cloud company, with an ecommerce business on the side.
Ranked: These Are 10 of the World’s Least Affordable Housing Markets
An analysis of 90+ major cities reveals which ones are the least affordable housing markets based on their price-to-income ratio.
These Are 10 of the World’s Least Affordable Housing Markets
It’s become increasingly difficult for middle-class families to purchase a home over the last few years—and the global pandemic has only made things worse.
According to Demographia’s 2022 Housing Affordability Report, the number of housing markets around the world deemed “severely unaffordable” increased by 60% compared to 2019 (prior to the pandemic).
This graphic looks at some of the least affordable housing markets across the globe, relative to median household income. The report covers 92 different cities in eight nations: Australia, Canada, China, Ireland, New Zealand, Singapore, the United Kingdom, and the United States.
The Least Affordable Housing Markets
Before diving in, it’s worth outlining the methodology used in this report, to help explain what’s classified as a severely unaffordable housing market.
To calculate affordability, a city’s median housing price and divided by its median household income. From there, a city is given a score:
- A score of 5.1 or above is considered severely unaffordable
- 4.1 to 5.0 is considered seriously unaffordable
- 3.1 to 4.0 is considered moderately unaffordable
All the cities on this graphic are classified as severely unaffordable—and, for the 12th year in a row, Hong Kong takes the top spot as the world’s most unaffordable housing market, with a score of 23.2.
|Hong Kong||🇭🇰 Hong Kong (SAR)||23.2|
|Sydney, NSW||🇦🇺 Australia||15.3|
|Vancouver, BC||🇨🇦 Canada||13.3|
|San Jose, CA||🇺🇸 U.S.||12.6|
|Melbourne, VIC||🇦🇺 Australia||12.1|
|Honolulu, HI||🇺🇸 U.S.||12.0|
|San Francisco, CA||🇺🇸 U.S.||11.8|
|Auckland, AUK||🇳🇿 New Zealand||11.2|
|Los Angeles, CA||🇺🇸 U.S.||10.7|
|Toronto, ON||🇨🇦 Canada||10.5|
One reason for Hong Kong’s steep housing costs is its lack of supply, partly due to its lack of residential zoning—which only accounts for 7% of the region’s zoned land. For context, 75% of New York City’s land area is dedicated to residential housing.
Sydney moved up one spot this year, making it the second most expensive city to purchase a home on the list, with a score of 15.3. Besides Hong Kong, no other city has scored this high in the last 18 years this report has been released.
There are several theories for Sydney’s soaring housing rates, but industry expert Tom Forrest, CEO of Urban Taskforce Australia, boils it down to one fundamental issue in an interview with Australia Broker—supply isn’t keeping up with demand:
“Housing supply has been consistently not meeting demand in the Greater Sydney and across regional New South Wales…if you have supply consistently not meeting demand then the price will go up. That’s what happened and we’re seeing it in abundance.”Tom Forrest, CEO of Urban Taskforce Australia
The COVID-19 Impact
Middle-income earners were already feeling the squeeze prior to the global pandemic, but COVID-19 only exacerbated housing affordability issues.
As people began to work from home, high-income earners started to look for more spacious housing that wasn’t necessarily in the city center, driving up demand in suburban areas that were relatively affordable prior to the pandemic.
At the same time, supply chain issues and material costs impacted construction, which created a perfect storm that ultimately drove housing prices up.
But with interest rates rising and COVID-19 restrictions easing around the world, some experts are predicting a market cool down this year—at least in some parts of the world.
>>Like this? Then you might like this article: How Much Prime Real Estate Could You Buy for $1M?
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