shipping industry invests in proven potential

Shipping Industry Invests in Regions With Proven Potential

A majority of people would agree that the world’s economy has been confronted by challenges which have adversely affected many of the key sectors that have historically encouraged growth, such as the shipping industry for example.

With approximately 90 percent of world’s trade being transported by the global shipping industry, the successes (and failures) of industry leaders – such as Maersk Line make important contributions to international economic growth, or in some instances the lack thereof. Generally speaking, their performance is a strong indication of what the investment community can expect from global GDP, and their returns on investment.

Despite the fact that at this moment the global shipping industry and world trade are struggling along-side a battered world economy, industry and investor confidence is rising and strategic investments are continuing to fuel economic prosperity. Whether it be in developed or emerging markets, investors and industry leaders are identifying and capitalizing on opportunities to invest in global trade and drive growth.

Dubai port/terminal operator DP World is a great example of an industry leader that is investing in economic growth. The company has made a half-a-billion dollar commitment at Berbera port that will deliver the necessary investment needed to return the region to a major African trading hub and ignite the regional economy. Also, DP World has begun a $1.2 billion multi-purpose port project at Posorja in Ecuador, which is expected to increase the country’s competitiveness there as well. Company officials are confident that both are investments in emerging markets that show strong potential for future advancement. These two sizable commitments in Africa and South America demonstrate the importance of establishing a long-term investment plan.

dp world port project posorja ecuador

Choosing a path that may not be popular with critics requires confidence and careful planning. Just as DP World has done in developing markets, look to regions with established patterns of growth, stability, and potential. Albeit there are financial challenges all across the globe, there are a surprising number of economies that are performing very well, particularly when compared to more advanced, developed countries like the United States.

During times of economic turmoil, investors – whether they be private or institutional – must seek-out alternatives to traditional investing strategies, looking closely to identify markets that are enjoying consistent growth and prosperity. It is within these opportunities that shipping industry leaders have demonstrated that consistent performance and profits can be found.

asia economic growth shipping investment

Asian Economic Growth Makes Shipping an Appealing Investment

Chinese reforms have the potential to boost private consumption and transform the Asian economy. In doing so, the economic momentum will ignite GDP in the region, and make growth more sustainable.

The Economic Outlook For Asia:

Albeit nowhere near the 10 percent growth experienced by China in previous years, steady growth is still the outlook for Asia, particularly with China’s One Belt, One Road initiative steadily moving forward. According to analysts, Gross Domestic Product (GDP) increased 6.1 percent year-on-year in Q4 2015 and the growth is expected to continue throughout 2016. This strong growth is thanks to two important contributors:

  1. Exports of electronics to the United States and European Union, which have consistently gained momentum since 2013-2014.
  2. Solid domestic demand across much of Asia. In Japan for example, an increase in wealth has supported the growth of private consumption.

Asia’s Undisputed Dominance in Shipping:

With a large number of the world’s busiest shipping ports, such as Singapore, Shanghai, and Busan, located in Asia, the continents influence on the global shipping industry is irrefutable. To give you an example of the magnitude of their contribution to global economic growth, the port of Shanghai alone accommodates more than 32 million TEU each year.

asia shipping influence irrefutable

With some of the world’s busiest shipping ports located in Asia, the continents influence on global shipping is irrefutable.

Ports and terminals are not the only place Asian shipping companies have a foothold. Despite partnerships and alliances from leading container shipping lines outside the continent, Asia-based companies, such as CSCL, OOCL, and Hanjin are remaining competitive despite facing constant economic and industry-related challenges.

The Investment Climate in Asia:

With regards to the region’s financial stability, there is increasing risk for investors who continue to pursue traditional investments. Although for the moment global stock prices have appear to have stabilized, they are still an area of concern and risk.

In contrast to traditional options, Asia’s well-established alternative investments are growing increasingly appealing, and are demonstrating that they are a great investment for the world’s more cautious investors.

Sectors that promote growth in the region are seen as the most obvious choice. Shipping for example offers investors the opportunity to invest in port infrastructure and also in equipment, such as ship-to-shore cranes and shipping container investments.

asia alternative investments appeal to investors

Asia’s alternative investments are growing increasingly appealing and are proving to be a great investment for cautious investors.

Investing in Asia’s Growth Industries:

Potential growth in Asia is still much higher than in other developed regions. For many economies the quality of specialization and the sophistication of industry, as well as strong exports, suggests that the investment community can expect medium-term growth for Asia in 2016. Moreover, the stronger growth experienced in advanced economies such as the United States, in addition to more competitive exchange rates, will help drive Asian exports ever-higher. This will provide a great experience for investors and strengthen confidence in the shipping industry and the region.

China’s ambitious reform agenda, which has placed emphasis on private consumption, working in combination with some key investments made by the world’s leading shipping companies will help accelerate the re-balancing of the global economy. That said, private consumption (as a share of GDP) in Asia is expected to rise over the medium term, reaching nearly 40 percent of GDP, and deliver more sustainable growth to investors’ portfolios.