Booming Trade Show Bodes Well for Shippers

• By the tickerspy.com Staff
• On 10:21 am EDT, Thursday October 15, 2009

The world's largest trade show, the Canton Fair in Guangzhou, China, was swarmed on its opening day, and no matter what people are buying, it'll have to get shipped somewhere.

In China, the currency is cheap and the wages are low, which means products can be produced at bargain prices and sold around the world with a sizable markup. According to The New York Times, the combination helped bring traffic to the Canton Fair. While the trade show represents various segments of the retail industry, international buyers all share a common need - shipping.

Exporters told The Times that buying interest from the U.S. is fairly weak in comparison to recovering demand from Europe and emerging markets. Some also noted that demand from Australia is coming back.

If Chinese exports pick up, some components of the Shipping Stocks Index could see some more upside.

Container shipping companies, many of which are privately held or traded on overseas exchanges, stand to benefit from increased demand from distributors and wholesalers across the globe. Public players Seaspan (NYSE: SSW - News) and Danaos (NYSE: DAC - News) are both listed on the New York Stock Exchange. Both are up by more than 10% over the lat month.

Other beneficiaries of bolstered shipping demand can be found in the Railroad Stocks Index. Burlington Northern Santa Fe (NYSE: BNI - News), CSX (NYSE: CSX - News), and Union Pacific (NYSE: UNP - News) would likely ship more imports once they hit U.S. shores. China's Guangshen Railway (NYSE: GSH - News) is also a potential winner from the pickup in demand for Chinese goods.

Investors looking for diversified sea-based shipping exposure might like the Claymore/Delta Global Shipping ETF (NYSE: SEA - News). Holdings include dry bulker Diana Shipping (NYSE: DSX - News), General Maritime (NYSE: GMR - News), and Teekay Shipping (NYSE: TK - News).

As of this writing, the Shipping Stocks Index is one of the top-15 tickerspy Indexes by dividend yield, paying out an average of 4.8%.

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