Shipping Industry After Struggles And Trillions in Investment

It would seem that after more than half a decade of struggles and trillions in investment, the global shipping industry is finally experiencing strong growth.

It would seem that after more than half a decade of economic struggles the global economy and the international shipping industry are finally experiencing stability and strong growth, that has not been seen since the days before the global financial crisis. This is encouraging news for an investment community that has struggled alongside, and are eagerly seeking signs of meaningful improvement.

In recent years, the momentum generated by the investment in gigantic container vessels and the expansion of the Panama Canal, has resulted in trillions of dollars being spent on funding upgrades and improvements to shipping ports and container terminals; in countries all over the world. Officials believe these investments are necessary to accommodate the steady rise in demand for shipping containers in existing and emerging markets, and also to prepare for the economic boom that economists have forecast will begin in 2015.

Making preparations of their own for the coming year, much of 2013 and early 2014 has been characterized by container shipping alliances formed in some of the most unlikely of places. Perhaps the strangest has been the proposed P3 alliance, between the industry's three largest shipping lines. Another surprise saw CSAV's shareholders approve the Hapag-Lloyd merger in late March 2014, and subsequently create the world's fourth largest container shipping company.

From the perspective of private investors, each of these monumental events have created incredible opportunities to profit from a reinvigorated industry, as well as strong economic growth in established and developing nations. The investment into bigger vessels and larger terminal capacities, have opened the door for contributions from the private sector like shipping container investments that help industry leaders maintain efficiency in the worldwide fleet, and facilitate the uninterrupted flow of consumer goods.

Investors And Shipping Industry Share Same Investing Goals

With stock market returns falling and the threat of interest rates rising, the investment community is struggling to find dependable (and profitable) investing options that will lower their exposure to risk, and improve profits. Another international community seeking the same long-term goals and returns, is the global shipping industry. Faced with a decline in revenues since the global financial crisis introduced economic hardship and vessel overcapacity threatened profits, the maritime shipping sector is just as eager to identify viable alternatives, as the world's investors are. Learning from one another, the international investment and shipping communities are certain to generate profitable solutions and uncover investing secrets, that will help to increase the return on investment in a volatile market.

At the moment, shipping industry leaders are making investments into shipping ports and infrastructure, that will ensure that the prospering regions of the world can encourage and accommodate their steady economic growth. In making these improvements, companies like APM Terminals can help bustling regions facilitate any rise in international trade, and in turn; increase revenues for shipping companies. The investment community can follow the lead of shipping companies, by making similar, smaller-scale investments in contributing assets like shipping containers; that will derive benefit from the rise in trade volume as well.

As regions look to increase their GDP, contributions from the shipping industry will become increasingly important, particularly with helping them achieve their economic goals. The steady growth in imports/exports will cause the demand for shipping containers to rise. At the moment, industry leaders like Maersk Line are suggesting that the container market could experience 5% growth in some regions. Just as port and infrastructure investing is needed to maintain and improve efficiency, there is a constant need for investors to invest in shipping containers to accommodate strong growth in both the industry and the economic.

Major Shipping Container Lines Announce Increase in TEU Rates

Among other Shipping industry leaders, Hapag-Lloyd has announced that they will be pushing through a rate increase, on westbound services from Asia. The company has said that the increases would be equivalent to US$750, or approximately a 50 per cent rise in the cost of shipping a 20-foot container from Shanghai to Europe, based on current spot freight rates.

It has also been reported that Orient Overseas Container Line (OOCL), the Tung family-controlled shipping company, became the latest shipping container line to confirm rate rises on the Asia-Europe-Middle East route. The carrier recently announced a US$700 per TEU (20-foot equivalent unit) increase on westbound services from Asia and India to Europe and the Mediterranean, beginning March 15, 2013. It has also been said that OOCL is seeking a US$500 per TEU rise on refrigerated containers, transported on routes from Asia to the Middle East. This followed the company's already confirmed increases on Europe-Asia shipments of US$200 per TEU and US$300 per FEU (40-foot equivalent unit) which began March 1.

Aside from Hapag-Lloyd and OOCL, Maersk and Cosco Container Lines, have also confirmed their intention to raise shipping rates in mid-March as well. Cosco for one, has openly stated that it intends to implement a US$775 per TEU increase on shipments to Europe and the Mediterranean, with rises on other services from Asia. Maersk on the other hand has said it intends to apply only a US$600 per TEU increase, making it the lowest rate increase among industry leaders.


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