Globalization and China are two long running themes at the heart of the shipping industry, and standardized containers are acting as a wedge to drive down the cost of doing business worldwide. Now a new exchange-traded fund, the Claymore/Delta Global Shipping Index ETF (NYSE: SEA ) , offers investors exposure to an industry driven by trade and gives them a chance to profit, if the recent storms in the global markets begin to subside.
- Inception date: Aug. 25, 2008
- Expense ratio: 0.65%
- Net assets: $6 million
The Claymore Shipping fund tracks the Delta Global Shipping Index, which consists of 30 global maritime shipping stocks that get at least 80% of their revenues from overseas shipping. Greek companies represent a third of the fund's assets, and the U.S. and Bermuda makes up another third. Top stock holdings include Euroseas (Nasdaq: ESEA ) , Seaspan (NYSE: SSW ) , and Diana Shipping (NYSE: DSX ) .
A key element of global trade, shipping affects 90% of the total volume of the world's traded goods. In recent years, a rapidly expanding global economy has smoothed the waters for a boom in seaborne trade.
What comes next for shipping, however, depends on how the economics play out. Higher commodity prices threatened to stifle demand and potentially reduce shipping volumes, while high costs for steel and the other raw materials needed to build more ships created a barrier to entry for potential competitors. Now that most commodities have fallen sharply from their peaks, however, it remains to be seen whether we'll see a revival in global economic activity.
Obviously, with the Claymore Shipping fund concentrated in a single industry, there are more risks to this fund than in more diversified ETFs, such as the iShares Transportation ETF, which also includes FedEx (NYSE: FDX ) , Burlington Northern Santa Fe (NYSE: BNI ) , and Southwest Airlines (NYSE: LUV ) .
With shipping companies' exposure to international politics, labor strikes, and difficulties with port access, there's always the possibility of rough seas ahead. But as long as people want to trade, shipping will continue to thrive in the long run.