The shipping industry is a crucial and permanent part of the global economy. In fact, it is said that the shipping industry alone is responsible for the transport and carriage of 90% of the products involved in world trade. In the USA alone, the shipping industry is valued to be at $700 billion and is predicted to reach the trillion dollar mark by 2020. Because of this, a lot of investors are looking into the odds of making it big by investing in shipping stocks.

Why invest in shipping?

Have you tried shipping out a package before? Check out the Shipping Rates. Each day, thousands of people send out packages whether it be for personal reasons or business. And although USPS Shipping Rates are affordable and cheap, the number of people using the service assures that there will always be money circulating in the shipping industry. If the global economy continues to show signs of recovery, freight volumes are expected to stabilize over the years. With this, consolidation in the industry will also help decrease price competition and this will help the profitability of the shipping industries. A lot of value investors have found opportunities in shipping stocks as the fundamentals of the industry continuously improve. Some shipping stocks can deliver higher than average market dividend yields.

Factors affecting the shipping industry:

Supply

This refers to the number of vessels that are on the market and the total is affected by new builds and vessels that retire.

Demand

This is the demand for the shipping service by the consumers, and the demand is affected by the overall global economy and its growth.

Cost

This refers not to the shipping rates alone but the overall cost of operating a shipping vessel which can be affected by the cost of bunker fuel and interest rates for shipping companies that are still paying off debt.

How to invest in shipping

1. Exchange-traded funds or ETFs

If you are looking for an easy way to invest in the shipping industry, ETFs are your best option since they can give you different exposures in one form of security.

2. Individual Stocks

American depositary receipts or ADRs and common stock are another way for you to invest in the global shipping industry. Here, you get to select individual stocks.

The shipping industry might be a sector that has struggled over the past years due to a past economic crisis. However, now that the global economy is showing so much improvement and the shipping industry is the lifeline of the global economy, investing in shipping stocks is now turning out to be a profitable trading move. So if you are looking for new stocks to invest in, taking a look at shipping stocks will be worth your time and money.