Why Are Investors Attracted To Container Shipping Investing?

Investors are attracted to investments in container shipping because the sector heavily influences, and profits from, two very important industries; manufacturing and transportation. Given its contribution to the performance of these two key industries, analysts agree that the outlook for container shipping is favorable and as a result, has inspired more investment in many facets of the industry. Aside from investing in bigger container ships to meet the growing demand, maritime shipping companies have focused their attention on maintaining their fleet of shipping containers.

In the last half-a-century, the shipping container has proven itself to be an indispensable part of world trade. Container shipping companies have recognized that In order for the global economy to enjoy long-term prosperity, there must be continued investment to ensure a ready supply of cargo containers. In taking this approach, companies in the container shipping industry will enjoy bigger profits, which will in turn encourage more investment to fund further growth.

For private investors looking to make an investment in the prospering sector, shipping containers provide the “in” they need. Investors who invest in containers are receiving income from the lease of their maritime assets, while feeding the world’s increasing demand for containers. Another reason for their popularity is that even during the global financial crisis, shipping containers investments continued to outperform traditional investments. This track record of consistently generating income is very attractive to investment-seekers.

Amid very few industries showing strong growth in the last decade, container shipping’s future looks very bright and very promising. This is thanks in part to mergers and alliances within the industry. The newly established partnerships have improved the flow of the supply chain, as well as promoted the efficient use of resources. This has contributed, alongside continued investment, to the container shipping industry’s continued prosperity and rising profits.

Traditional Investments Pose A Threat To Financial Stability

When investors are faced with the reality that the traditional investments in their portfolio are posing a risk to their financial stability, many are turning to the safety of alternative investments for support. For one, the investment community is concerned that stocks may be overvalued and are due for a correction soon. As well, any rise in interest rates would cause bond values to drop. In the minds of some investors, this rectification could mean financial ruin.

For investors with a low tolerance for risk and/or a poor understanding of how stocks and bonds work, alternative investments offer relief from their investing worries. With opportunities that are not as risky and much easier to understand. an increasing number of investment seekers are inspired to move away from traditional assets and pursue alternatives instead.

The performance of a large number of alternative investments, like shipping containers, are closely related to worldwide economic growth, and – perhaps more importantly – are not influenced by the values of traditional investments. With continued growth of the global economy, the demand for hard assets – and thus their value, is rising. This is very appealing to investment seekers who are worried about the traditional contents of their portfolio.

Topping the list of alternative investments is shipping containers. When investors invest in containers, their returns are driven by economic growth around the world and are completely unaffected by stocks’ and bonds’ performance. As long as world trade continues to flourish and countries are committed to raising their GDP, shipping containers will remain in high demand and continue to deliver a monthly income to container investors.

If you are an investor who is growing increasingly concerned about the traditional holdings in your portfolio, it is likely time to review your investments and carefully consider the alternatives. Aside from shipping containers, these include real estate investments, investing in fine wine, and an investment in gold; to name a few of the available options. With a market correction looming and the Fed teetering on an interest rate rise, the investment community would be wise to research alternative investments, and adjust their portfolio accordingly.

Blogs, Forums, Communities Have Info For Investment Seekers

As investors, when we find ourselves unhappy with the performance of investments in our portfolio, we begin the search for a suitable replacement; or if need be, replacements. Nowadays the pursuit of investing answers almost always begins with a visit to an internet search engine. Choices found here will include a collection of blog posts, forum discussions, and community boards. These web resources can be used to provide investment-seekers with the insight, information, and experience they need to make confident investment decisions.

Blogs

There seems to be a never-ending supply of investment advisers and fund managers eager to share their views and opinions in blogs and articles. That said, investors should be cautious about relying heavily on the information found in independent online publications. After all, many of the posts and comments are authored by advisers and managers with their own investment fund to push, and personal agenda to pursue.

Forums

Forums, like Communities discussed below, are a place where like-minded people can congregate to discuss common interests; like investing. Information shared in this environment is a mix of expert, amateur, and idiot. The greatest challenge to extracting information from here is that conflicting opinions and information can confuse investors.

Communities

In an online community, like the Forums discussed above, people – expert or otherwise – are free to share their views and opinions with anyone who will listen. This means that the information received can be helpful or harmful to investment seekers. Investors should carefully vet their sources to determine who is full of wins, and who is “full of wind.”

Any or all of these online resources can help investors find investments to invest in. The challenge is to identify which information being shared is genuine, and which information is intended to fool an investor. This certainly does not mean that you should rely on a money manager to choose your entire portfolio. It is important for investors to have input and be confident that the investment decisions being made are moving them closer to their financial goals.

Maritime Shipping Companies Continue to Invest in Containers

After nearly a decade of volatility and uncertainty, the global economy is well on its way to a full recovery. This is thanks in part to the continued investment, and tireless efforts of the container shipping industry. Container shipping leaders, like Maersk and the Mediterranean Shipping Company, have set a course to improve performance and reduce their operating costs; others in the industry have been quick to follow their example.

To improve the performance of their container shipping fleet, and address the challenges posed by low freight rates and increased competition, leading maritime transport companies have had to invest in innovation. An example of this is when they invest in containers.

Temperature Controlled Refrigerated Containers

In recent years, trade with markets in South America and Africa has increased. This has prompted container lines to invest in more efficient, temperature controlled refrigerated containers – more commonly known as “reefers,” to address the challenges of keeping perishable cargo fresher and stable over long voyages.

Maersk Line, which boasts the largest reefer container fleet with 20 percent of the global market, purchased 30,000 additional units in 2015 alone.

Container Tracking Technology

Following a conversation with CMA CGM’s founder Jacques Saade, who spoke of the difficulties related to tracking a shipping container around the world, Michel Fallah (founder and CEO of TRAXENS) was inspired to create a container tracking solution for mass deployment. The biggest challenge facing Fallah was that all containers in a fleet needed to be smart, not just some. This meant that a solution needed to be a low-cost technology with a very long battery life, to accommodate the fact that while reefer containers are powered, dry containers are not. Today, TRAXENS’ innovative hardware can be affixed permanently inside a shipping container during the manufacturing phase.

This feature is very attractive for shipping lines. They want to know where their equipment is, especially the high-value reefer containers. And we can continue communicating with the container even without the container being powered up. – Tim Baker, Director of Marketing and Communications, TRAXENS

A container line like Maersk Line or a container leasing company can simply order a smart container, and the data tracking subscription is included. Although the hardware is designed for inclusion during the manufacturing of the shipping container, it can also be added afterward.

Summary

Investment in controlled atmosphere and other innovative technologies are helping container shipping lines capture new markets and product sectors, especially with regards to temperature-controlled pharmaceuticals and perishable cargo. Given the fact that they continue to invest, it is apparent that the world’s leading carriers are bullish on the future of reefer shipping, and ready to capitalize on it.

Alternatives Offer More Stability And Less Uncertainty

For investors who are tired of the volatility that comes with investing in the stock market, there are alternatives. Since the financial crisis in 2008-2009 a different class of investment has emerged; one that offers more stability and less uncertainty. They are commonly known as alternative investments.

To clarify, alternative investments are any investment outside the traditional opportunities, like stocks, bonds, and high-interest savings accounts. Popular alternatives include private equity, investing in shipping containers and other hard assets, to name a few.

Private Equity

Using private equity, investors and/or managed investment funds make investments directly into private companies. In some instances, the private equity is used to conduct buyouts of public companies, with the intention of making them private. Funds raised through private equity investment are most often used to develop new products/technologies, expand working capital, make corporate acquisitions, or strengthen a private company’s balance sheet.

Shipping Containers

Popular because it is an income-generating investment, shipping container investing is an investment in a tangible asset. With the help of a container leasing company, investors can own a fleet of shipping containers that earn a monthly income for them. The shipping containers purchased by investors are deployed by the leasing company to industry leaders who operate on the busy trade routes around the world.

Hard Assets

Hard asset investments, such as precious metals, real estate, and collectibles, have demonstrated their ability to preserve an investor’s capital. As well, hard asset investments have shown that they can make gains in the face of economic uncertainty and rising inflation. Fine wine and gold bars must be securely stored, farmland must be mowed, and classic cars must be maintained. If this is something an investor cannot do themselves, it may become an additional, unexpected expense.

Traditional investments have been relied too heavily upon by investors to produce solid returns week after week. Over the last decade many of the “go-to” investments have been performing very poorly. As long as traditional investments are subject to political and economical influence, investors would be wise to move toward alternatives to protect their wealth and improve the performance of their portfolio.

Why Do Investors Choose Hard Assets Over Stock or Bonds?

With so much volatility and uncertainty all over the world, worried investors – like me – are reassessing their portfolios. The impact that political decisions can have on a traditional investment – like stocks and bonds – is definitely cause for worry and a reason to seek safety in hard assets. Look at the Brexit vote in the United Kingdom in mid-2016.

The London stock market dropped significantly in the wake of the Brexit vote, plunging by nearly 9%. A report from Morningstar showed that worries over the Brexit referendum results prompted investors to withdraw £5.7 billion from UK equity funds in early July 2016. Also, against the U.S. dollar, the pound quickly dropped to its lowest level in more than 30 years.

Other European markets also dropped following the surprise result, with many posting larger losses than the London markets. Germany’s DAX index fell by nearly 7%, while the French CAC dropped by 8%. Stocks in Ireland closed with a loss of nearly 8%.

The flight to safety also caused bond yields to plunge to record lows across the globe, making it even harder for investors to get decent income. The government bond rally pushed yields on over $10 trillion in global bonds below zero, most notably the 10-year German bond yield – known as the bund – which spent three sessions in negative territory; for the first time in history. In Switzerland, the yield on the country’s 30 year bond turned negative for the first time ever.

When Brexit prevailed, there was volatility and a flight to gold as well. This resulted in a sharp rise in the demand for the precious metal, which drove gold to its highest price in more than two years. At one point, in the immediate aftermath of the Brexit vote, it surpassed the $1,358.20 milestone achieved on June 24, 2016. After all, hoarding gold is a centuries-old reaction in times of crisis, and the aftermath of the EU referendum vote was no different.

gold rallied 2016

For anyone investing for retirement, exposure to the stock or bond market would have meant significant losses after Brexit. The addition of alternative investments – like gold – to a portfolio would have gone the opposite way of stock and bond returns. This would have delivered profits in a time of political turmoil and is therefore, one the most compelling reason why investors are choosing hard assets over traditional investments.

Are Alternative Investments A Popular Choice? If Yes, Why?

The alternative investment industry has continued to demonstrate strong growth throughout 2015 and the first half of 2016. In a recent survey by Bank of New York Mellon Corp., investors showed a greater interest in investing in alternatives. In fact, more than one-third of investors surveyed said they would increase allocations to alternative investments in 2017.

The increase in interest in alternative investments is driven by investor demand. People are beginning to look at opportunities across the globe to diversify their portfolios. They are looking to include a wider range of asset classes that will generate strong returns, reduce volatility, hedge against inflation, and access reliable income sources.

For decades, traditional investments delivered on their promise of generating consistent returns on investment. But now, the landscape has changed for investors. The Financial Crisis that began in 2008 introduced an environment of extended low interest rates that has nearly wiped out expected returns on bonds and cash investments. In doing so, it has driven home the need for greater diversification.

The beauty of diversification is it’s about as close as you can get to a free lunch in investing. – Barry Ritholtz

Increasingly, affluent, high-net-worth investors across the globe are using alternative investments in their portfolios over and above stocks, bonds, and cash investments. Alternative products like investing in containers, allow investors to tailor the way they extract return and the shape of risk they are comfortable with. Not only can this be helpful from a risk management perspective, it is a way for smart investors to create a volatility exposure that protects other parts of their portfolio.

One key advantage of alternative assets is that they have different, and asymmetric, risk/return profiles. This combination creates very powerful diversification. Because of this positive behavior, alternative asset classes such as private equity, commodities and hard assets, infrastructure investments, and the like, are gaining popularity rapidly. Estimates see the global alternative investment pool of assets under management to be in excess of US$10 trillion and still rising.

Do Not Expect Significant Rates Of Return From Bonds

With interest rates still very low and likely to rise, investors should not expect a significant rate of return from bond holdings in 2016.

Now that the U.S. Federal Reserve is raising rates, bond investors are being confronted by their greatest fear. Historically speaking, the value of bonds will drop when rates rise, simply because their yields are less attractive than those of newly issued bonds; and even hard assets for that matter. In fact, if rates do rise even modestly, it WILL hurt bond prices and negatively affect the total return for bond investors.

barclays says curb expectations

“Curb your expectations.” – Barclays Investment Bank

Analysts believe that the Federal Reserve’s policy has not just been keeping borrowing costs down in the bond market, it has also been an important contributor to high stock market prices, as well as the surprisingly speedy recovery in the U.S. housing market. The truth be told, too much of a rise in rates will create problems that extend beyond bonds. The impact of higher rates could hurt the economy, which would in turn place pressure on rates.

“If it becomes clear that the business cycle is not facing an imminent recession in developed markets, we think spreads should rally modestly, helped by accommodative central banks outside the United States”. – Barclays Strategists Annual Outlook [2016]

Another point of concern for many analysts and savvy investors is that the central banks in Europe, Japan and elsewhere, are actively pumping stimulus into their economies to drive growth; the Federal Reserve is moving in the opposite direction. Let’s not discount that long-term rates depend not just on where the U.S. Federal Reserve is heading, but also on inflation.

Economists have forecast that once the Federal Reserve begins its cycle of rate hikes, expecting anywhere from two to four rate hikes based on inflation expectations and financial conditions, the bond bubble will burst.

Considering the risk that both Federal Reserve rate hikes and inflation pose, in conjunction with the recent market volatility that is adversely affecting the daily price of bond holdings, it is recommended that investors maintain a very cautious approach to investing in bonds; and consider introducing alternative investments to their portfolio to limit their exposure to the current financial and economic factors.

Three Things China Can Do To Mend Its Markets And Economy

Although the drop in China’s stock markets began on June 5, 2015 and ran through August 2015, there were new market challenges that emerged in January of 2016. These repeated drops in China’s markets has caused Chinese and international investors to re-think their approach to investing in traditional assets, and seek-out other, less-risky options. For many investment-seekers, alternative investments in hard-assets like investing in containers have emerged as the ideal investment solution.

Since the sharp decline began, top markets such as Shanghai Stock Exchange have tumbled; at one point losing a third of their value in less than a month. This means that investors in China and around the world have lost millions and millions of dollars.

Regrettably, the stock market instability has made its way outside China and into other foreign markets. The Nikkei index in Japan experienced a 4.6% slip in their normal trading value, and the European market dropped by 5%; even the Dow, and the Germany’s DAX have experienced losses. Although the markets have since regained their stability, and some have even gained ground, returns on stock market investments have decreased and the associated risks have increased.

From my perspective the Chinese government could use these three different policies and methods to solve the issues in their market and mend their economy.

Firstly, the government could buy stocks. One way to accomplish this is to lend money to asset managers like a brokerage company so that they can do a buyback of stocks. Another way to be successful is for the Chinese government should buy small and average performing stocks.

Secondly, the government could use new stimulus plans to allocate huge amounts of investment into different areas of the economy that encourage growth and act as pillars of the economy. Making investments in shipping ports and infrastructure have demonstrated they can drive economic growth.

Thirdly, China should aim at increasing the spending power of its citizens.

The steady drop in the Chinese stock market has created financial uncertainty throughout the world, and in doing so, has shed the light on the increased risk stock market investments pose to investors’ wealth. That said, “money” is one thing, but some of the investors have lost more than personal wealth in the stock market; they have lost interest too. Many of the investors who are discouraged by the performance of traditional assets (like stocks) are looking to rebuild their wealth by including more alternative assets in their portfolio.

A Savvy Investors’ Guide to Alternative Investments

In the eyes of many institutional investors and high-net-worth individuals, investing in alternatives continued to emerge as an attractive investing option in 2015. This positive trend is expected to continue throughout 2016 and 2017, as the uncertain – possibly overvalued – public markets drive more and more investors to seek-out profitable returns in other markets.

The fact of the matter is that years of increasing volatility in public equities, and the shrinking yield on bonds, has caused battered investors to seriously consider introducing alternative assets to their portfolio, particularly as a means of diversifying their investment holdings. In 2015, wealthy investors were looking for real protection from market swings, and alternatives have stepped-up to meet their needs.

Among all the alternative investment opportunities available to investors this coming year, there are three investments that – based on historical performance, economic forecasts, and reviews – will deliver great performances for investors in 2016: Real Estate, Precious Metals, and Shipping Container investments.

Real Estate

The definition of what constitutes “investing in real estate” is expected to continue to expand in 2016. As investors seek to balance capital conservation with capital growth, it will become more difficult to classify investment-seekers as core, value-added, or opportunistic. Instead, 2016 will see the investment community searching out a wider spectrum of real estate offerings in both established and emerging markets.

The ever-evolving forces of globalization, technology and urbanization are constantly influencing one another. We can expect that this will require real estate investments to be evermore dynamic as they adapt to a networked world.

In 2016, “mixed use” investments that combine condominiums, offices, retail space are forecast to be strong in urban markets. Much of this will be driven by the growth of e-commerce and shifting consumer behaviors, that will encourage companies to make constant improvements to their supply chain. Because of this, the demand for industrial buildings and land that is suited for distribution centers will rise across the globe.

real estate looks doggone good in 2016

The next 24 months look doggone good for real estate. – Lending Officer, Major Financial Institution

Aside from new real estate buildings and developments, analysts expect significant investment into the redevelopment of older buildings. This will come about as companies begin to recognize the need for facility upgrades to accommodate the growing demands of tenants. After all, in business – like biology – adaptation is the key to survival and maintaining a competitive advantage.

Precious Metals

Analysts from across the globe are forecasting that gold prices will rebound in 2016, climbing to $1250 an ounce. As well, both silver and platinum are expected to see higher prices too, rising to $17.50 and $1100 respectively and giving investors compelling reasons to invest in precious metals.

If you’ve never owned gold stocks, this probably isn’t a bad time to add them. – William Bernstein, Author of “If You Can: How Millennials Can Get Rich Slowly.”

add gold investments 2016

The strong international demand for Silver, coupled with a drop in production in 2015 – 23 percent in Canada, 5 percent in the United States, and 4 percent each in Australia, Chile and Mexico, is very likely to have a major impact on the precious metal’s value in 2016. After all, basic economics suggest that when demand increases and the supply declines, prices will rise sharply.

Driving this strong demand for Silver is a new and major purchaser: India. To give an indication of the level of their demand, in August 2015 Indian investors imported $363 million worth of silver, 48% more than they did a year earlier in 2014. In September 2015, more than $433 million worth of silver was imported into the country, demonstrating India’s continued demand.

Shipping Containers

With the global financial crisis nearly a decade in the past, countries all over the world have persevered and – with the help of the container shipping industry – have delivered a strong recovery. Their economic growth has been fueled by making strategic investments in areas that facilitate global trade, like ports, terminals, and infrastructure, and also encourage domestic prosperity.

According to industry research, more than 90 percent of the world’s consumer cargo is delivered by the container shipping industry. Thus, investors can expect that any increase in a country’s GDP is going to mean an increase in the number of shipping containers needed to facilitate the demand. Regardless of whether they are imported or exported containers, the international container fleet must be prepared to facilitate economic growth.

Even in countries like the United States, where the economic recovery has been slow, government officials are seeing growth rates of close to three percent; and this is translating into rising demands at shipping ports and container terminals across the nation.

2016 container growth relative to gdp

[Over the longer term] our expectation is that container growth is going to grow relatively in line with GDP. – Moses Kopmar, Moody’s Analyst and Author of Moody’s Investors Service Report

In prospering nations like China – which will see growth rates of approximately seven percent – the need for shipping containers to meet the Asian giant’s ever-rising import and export demands can be expected to increase steadily year after year, as well. This constant economic growth must be funded by continuous investment into shipping containers, infrastructure, and port-side equipment.

Alternative Investment Outlook For 2016

Growing increasingly appealing since 2012, the allocation of alternative investments in portfolios is expected to continue to increase year-over-year. In fact, PriceWaterhouseCoopers has forecast that investor adoption of alternatives will grow approximately 10 percent per year, ultimately reaching a value of $13 trillion by 2020.

The most popular reason for this steady investor migration from traditional investments, like stocks and bonds, is that alternative investments have consistently proven that they can satisfy an investors need for diversification. Given that they tend to exhibit a much lower correlation and behave differently than traditional investments, thereby limiting the impact the sudden drop in value of one investment would have on the whole portfolio, alternatives investments – like real estate, shipping containers, gemstones, and precious metals – are commonly recommended to diversify a portfolio.

Investors need to be aware that historically, alternative investments have offered much better risk-adjusted returns than traditional asset classes. In doing so, they have consistently outperformed traditional investments, while experiencing lower volatility. The international investment community can expect that this trend of positive alternative investment returns will continue throughout 2016.