In the global economy there are several attractive growing industries that should be considered for investment. Among these are the auto, shipping, airline, and utility. Most industries are affected by global economic growth and are seeing a recent increase. Each industry has unique qualities that separate themselves.
The shipping industry is one of the most difficult industries to enter, however it is appealing as a long term investment. Currently the shipping and cargo industry is responsible for transporting all cargo and passengers by water around the world. Despite the growing need for worldwide trade, demand for this industry is seeing a decline. Over the past five years the total value of industry has declined by an estimated .2%, this is mainly due to international maritime carrying capacity regulations and trade laws.(Sayler B.) Other factor that has limited the industry and hade it harder to enter is the plethora of carriers. Recently large shipping companies have increased their spending to acquire more boats and other equipment. There is an existing rivalry in this industry as the top four carriers control less than 25% of the market. (Sayler B. This also makes the industry difficult to enter as there are many carriers spread out around the world. Despite the unconvincing statistics in the past five years the shipping industry is projected to increase in value by 2.9% in the next five years, (Sayler. B) this is most likely due to the increasing global population and need for trade. Also there are many developing countries who are currently entering the global trade market. In order to get the most out of this industry investors should look to shipping opportunities in new smaller markets because the large scale market is already dominated by large carriers. Another factor that investors should consider is the lack of substitution for the industry. There are very few substitutes for large scale shipping overseas as Cargo planes cannot transport nearly as much product as ships. Overall this is a growing industry but not the best future investment.
Another industry with high barriers to entry is the Global Auto industry which has a value of over $2.5 trillion.(Morea, S) The revenues in this industry may be deceiving to some investors as it also entails the largest rivalry within the industry making it very hard to enter. Having been around for a while, and there are already dozens of brands that have an established loyal consumer base. Despite having many companies, the industry has low concentration in that the top four supplies control 30% of the market.(Morea, S) Suppliers also benefit from 77.4% of their costs being purchases, this stands out among the industries as this is by far the greatest rate of return. (Morea, S) The automotive industry will continue to grow in first world countries with large economic growth like the United States and Europe. Effectively this industry would be ideal without the high startup costs and rivalries. Also there are various substitutions for automotive travel that makes it of less value. Whether it's a quick ride or a long haul there are better ways to travel than driving. Gas is becoming cheaper and more companies have developed technology to improve economic efficiency. In addition the electric car industry will have an effect on the automotive industry. With the revolution of solar and renewable energy, gas powered vehicles will decline. The United States is targeting to have 50% of its energy be renewable by 2050, this means that electric powered utilities will decline in the next few years (Da Costa). Investors should be weary of this as the future of the gas powered vehicles may be in jeopardy. This industry is profitable however it is very difficult to enter and the long term future is unlcear. Investors should consider specifically investing in the electric car industry over gas, as renewable energy will take over the world and squeeze out gas powered vehicles.
The final and most favorable industry is the Global Airlines industry. This industry is the most appealing for several reasons. To start of it has the lowest threat of substitution as fast long distance travel is virtually irreplaceable. This aspect of the industry is what makes it so popular and is what inspired inventors in the first place. Airlines have been around for many years with four companies accounting for 22.3% of the market.(Couillard, L.) This low concentration means that there is still a chunk of the market to take advantage of. There are existing rivalries however each company provides practically the same thing at similar prices which grants little power to the consumer. Like the automotive industry the airline industry will be affected by the overall economic growth of developed and undeveloped nations. More people are able to afford to fly which is beneficial for the industry.(Couillard, L.) Also like the automotive industry, airlines will also benefit from technological advances in fuel and airliners. Unlike the auto industry airlines have very few substitutes. It is difficult to cross an ocean or travel long distance in a short amount of time without a plane. This is the most intriguing aspect to the industry because there is an increasing need for long distance travel and no substitute for airplanes. Last year the industry was projected a growth of 5.1% and in the past five has seen an increase of .8%. (Couillard, L.) Even though the industry has high cost of entry and lots of competition, it is still a wise investment. In the future the airline industry will erupt with revenue it is just difficult to enter. Investors should focus on competition with other airlines and find a way to separate theirs from the others. Marketing and getting the brand out should be a priority at the start along with finding smaller markets to target. Compared to the others, the airline industry is the best investment because it is the easiest to enter and lacks substitutes.
These three industries all have positives and negatives however the airline industry is the most profitable and least risky. Although entering may be difficult, the other industries are already well established with too much competition. The airline industry would be ideal for an investment as it will grow with the economic growth of society on a large scale. Air travel is a service millions of people need every day around the world, unlike the auto or shipping industry, air travel is something the world revolves around and cannot be substituted.
...(download the rest of the essay above)