Shipping investments

Shipping investments are a form of alternative investments, which are considered to be low risk investments in comparison to high risk traditional investments. An alternative investment is a tangible investment in something other than stocks, bonds or cash, but rather in precious metals, art, antiques, stamps or shipping containers.

• 
  Port Elizabeth, New Jersey

Background

A Shipping Investment is an investment of money into an asset related to worldwide shipping, usually containers, with the expectation of capital appreciation, dividends, and/or interest earnings. In recent years most of the worlds shipping containers are being managed in the Far East since 8 of the world’s major ports are located in Asia. In 2012 the port of Shanghai alone handled 30 million units (TEUs) of containers for shipment, dealing with 36% of the world’s shipping containers.

Characteristics

Shipping investments is possible through a few major investment companies around the world that specialize in the shipping container leasing business. Shipping investment in containers is done by purchasing a container and then having an external company manage and lease the containers to merchants. Shipping container investment companies offer varied investment plans each with its own rate of return ranging from 12 percent to 30 percent, depending on the plan.

The high return rates are based on the growing demand for containers, especially by cargo ships that prefer to lease containers instead of buying them. Economist predicts that private equity investment in shipping could double by the end of 2014.

Shipping investments can be also used as a tool to reduce overall investment risk through diversification. Some of the characteristics of shipping investments may include:

• Low correlation with traditional financial investments such as stocks and bonds
• Considered to be a relatively liquid investment
• Costs of purchase and sale may be moderately high
• There may be limited risk and return data

Prospects

Improving living conditions are creating increased consumerism which in turn creates demands for more and more shipping containers, as 90% of the world trade is transported by sea.

• 
  Container Ship

Shipyards in China and Europe are building huge sized ships to accommodate the transportation of millions of shipping containers. In addition, Major shipping lines such as the Danish A.P. Moller-Maerskare well positioned for the upcoming demand and are planning to obtain a fleet of new generation container vessels able to transport 18,000 containers, each costing upwards of $200 million. To welcome the enormous ships Asian ports are spending billions of dollars for improvementssuch as deepening navigation channels, replacing container cranes, constructing new docks and providing additional container depots.

Scams

The industry is known to have been targeted by Scams, particularly in the form of Ponzi schemes. Known scams include Pacific Tycoon a front for a Belize/Vietnam-based scam .