The Alternative Face of Investment Opportunities in China

In 2013, China’s exports & imports of goods totalled $4.16 trillion, topping the United States for the first time. Today, there is little doubt about the fact that China has become a trading giant that is gaining muscle with every passing year. It is still the chosen manufacturing hub for all the major technology companies in the west, and all kinds of consumer products are manufactured and exported from here. The country is a mega trader in the true sense of the word and it now holds an 11.5% share in world trade and 47% percent of its own GDP is also accounted for by its trade endeavors.

Very High Demand

This makes the country very attractive from the view-point of FDI but very importantly, it also opens up many alternative investment opportunities in China for its own people. Trade is primarily carried out via sea routes.  Regardless of what is being shipped, containers are used to transport them. This has led to a massive demand for shipping containers. But post the economic bust, shipping companies have become very cautious with their money and they now just prefer to lease the shipping containers versus purchasing them.

Increasingly Popular Investment

Thus alternative investment opportunities in China like container leasing have received an immense boost and many serious investors are veering towards it. With China all set to become a champion of free trading, investors in the container leasing space are almost assured of very strong returns on their investments. A major percentage of exports from China are directed towards the United States and since 1990, there has been a growth of more than 200 times to Latin America, making it the fastest-growing corridor.

Double-Digit Export Growth

Exports from China to Latin America & Africa are currently growing at double-digit levels and market watchers aver that the country will continue to be a front-runner in global trade. The economic recovery across the developed world is a definite positive for China as there has been a significant rise in exports. All of this is very good news for investors in container leasing. As investment opportunities in China change face, it has helped in giving investors the much-needed respite after their speculations in the stock market saw their capital being all but run into the ground.

Attractive Alternative Investments

Today, most investors in China are re-looking at their investment strategies and repositioning their portfolios by making them more diverse. They are leaning towards alternative investments that have proved to be more stable and consistent in the long run. What also makes these investments more attractive is the fact that the initial capital requirement is not too high and individuals can start with buying and leasing out 5- 10 containers. The leasing company takes care of all the technicalities of maintaining inventory and records and the containers are then leased out to shipping companies that need them.

This has proved to be beneficial to investors as well as the shipping companies. The former have found a considerably risk-free method of engaging their money and the latter have found a more practical and cost-effective methods of transporting goods. This makes it a win-win situation for everyone involved.

How Pacific Tycoon Container Leasing Makes Perfect Sense

Many investors are now looking at shipping container leasing with renewed interest. This sector has proved to be an interesting one from numerous perspectives. It is an easy to understand and simple business and that is probably why people are getting attracted to it in droves. Companies that are involved in the business of container leasing as well as other related equipment largely cater to shipping lines. Industries such as trucking and railways also require these containers, but on a much smaller scale.

Making the Best of the Comeback

Shipping companies reeled under the economic downturn in 2008-2009 and they are still trying to make up for the decrease in margins that they had to suffer then. Despite the adverse economic landscape, the fact is that goods will have to be transported from one part of the world to another. What is interesting to note is that a major percentage of this trade and movement of goods takes place via sea routes and ships become the key transportation vehicles.

All Bases Covered

The goods are first packed into immense shipping containers and then shipped to the desired destination. Companies that are involved in container leasing are now leveraging the increase in exports from China to the rest of the world. There are a number of pros in favour of this business and Pacific Tycoon container leasing is now proving to be an excellent alternative investment opportunity for many an investor. Here are a few benefits that make it a lucrative investment opportunity:

•            Meeting Industry Demands- Shipping companies are increasingly leaning towards leasing containers versus owning the boxes. This gives them the logistical flexibility they need as they can lease only as many or as little as they want. But the general trend is that since the supply of containers is not high enough to meet the demand from shipping companies.

         Thus, most liners prefer entering into long-term leasing contracts with the leasing companies. This guarantees that they get the number of containers they need at a specific time. This high demand proves to be a boon for investors and they keep getting steady and high returns.

•            Lower operational costs- Shipping container leasing businesses are run via an office with agents who might be in different parts of the world. Since a large number of containers that leasing companies have, belong to the investors, their operational costs are very low. Since the inventory is managed via databases and online portals the overhead costs are negligible. All of this also means that their profits are higher and these profits are also passed onto investors.

•           Inventory value- Well-maintained containers can last for upto 20 years. Once they reach the end of their useful lifespan, they can then be sold-off to 3^rd parties or as scrap which gives investors an opportunity to recover a sizeable portion of the capital investment.

         Even as global trade flourishes, these companies will continue to make immense profits and so will the investors who have been adventurous enough to divest their capital into lucrative Pacific Tycoon container leasing.

The Mechanics of Shipping Container Investments

Shipping rates are on the decline and there has been a 54% drop in the past 3 months. The Baltic Dry Index now suggests that there is some disconnect in the demand and supply in the shipping industry. The thumb rule is that when the price of any product moves up fast, there will be certain dislocations in the market that offer a good opportunity for making profits. Though shipping rates are plummeting there is one segment of the shipping industry that has benefited and posted much higher profits than it had during the economic peak prior to 2008.

The Demand and Supply Game

Containership activity is up substantially. This has occurred because though the container rates are down and container shipping volumes have risen, the supply of containers has not proportionately grown. This, in turn has resulted in a rise in container leasing rates.  Not many realize this, but intermodal containers or standardized shipping containers have had an immense impact on the lives of people.

Before these entered the shipping space, it would take a week to unload a fully-packed cargo ship. Today, it takes less than 48 hours for a crew of 6 to unload 3,000 containers. It goes without saying that space on the ship is used more efficiently due to the standard shape and size of these containers. Approximately 90% of goods are shipped in them and manufacturing and global trade relies very heavily on containers. Though many shipping companies own them, they are dependent on container leasing companies for a large percentage of the supply.

Smart Investing

The demand easily exceeds the supply which consequently makes well-planned shipping container investments a lucrative proposition. The shipping industry is in fleet-expansion mode and veering away from investing in assets like shipping containers. Before 2009, shipping lines were very aggressively procuring these assets but the economic downturn changed all that. Today the focus is on lean operations and leasing containers is the preferred alternative.

Industry analysts have projected that investors have plenty of reasons to consider investing in containers. Growth and prosperity in trade across the world benefits those who make the best shipping container investments. To date in 2014, the containerized system is made up of more than 27 million TEU and the investment community can easily expect the containerized transportation industry to continue being a key contributor to growth in China and globally as well.  

The Transformation

Local markets and economies in China have been transformed with easier access to the international economy. This transformation process has been boosted with newer supply chains. With every passing year, the global economy becomes increasingly integrated. There have been some evident changes in political and economic ideologies. Standardization and reduction in regulatory barriers has added impetus to the mechanics of trade.

All these factors have led to a rise in demand for leased containers. These investments offer steady returns and transacting with a reliable company makes it a low-risk proposition. Investors can start out with acquiring 5-10 containers, sign an agreement with a well-established container leasing company and then sit back and enjoy steady returns for years to come.

Winds of Change in The Container Leasing Industry

Since 2013, shipping and railroad volumes have steadily been on the rise and the projection is that this trend will now continue, albeit at a slow and steady pace. Over the past one year there has been a consistent growth in demand for finished & raw goods from the emerging economies like China and other Asian countries. This has also resulted in an increase in demand for global transportation, a large percentage of which takes place via sea routes.

Slow and Steady

Shipping companies are still a little wary about increasing inventory and adding to operational costs and are now relaying largely on container leasing companies like Pacific Tycoon for transporting everything from perishables to iron ore. What is even more notable is the fact that they are now finding this more economical and convenient as they don’t have to worry about maintenance and upkeep of the containers. Today, things have reached such a stage where the supply of containers is very tight.

A Surging Current

This year, that shortage is going to be even greater. This trend might just turn into more of a longer-play opportunity. This also means that there is an opening to make a lucrative investment in this space. The trade agreements that had been brokered under Clinton had given a boost to the Chinese economy in the 1900’s and that current never abated. In January 2014, China’s trade performance touched a 6-month high. There was a 10.6% rise in total exports in China, in comparison to January 2013.

The country is the largest exporter in the world. Now the economies in developed countries are also on a rebound, which will fuel the country’s exports even further. Premier Li Keqiang has also now said that China will be accelerating the free-trade agreement with Australia. This too adds impetus to the overall growth that is taking place in the country.

The Horizon and Beyond

As trade increases, shipping companies will have to press more vessels into service and there will be a surge in the demand for containers. Container leasing companies like Pacific Tycoon are in for a busy and bright future. They are also sprucing-up their business models and making them more efficient. This helps in maintaining timelines and meeting increasing demands.  Since the demand still exceeds supply, they are also able to raise their rates and investors end up benefiting from the changing global and national economy.