How to Profit from Booming Global Trade Los Angeles is best known as the center of the global entertainment industry. And certainly, Hollywood's film industry is a global behemoth. But the Southern California city is also host to a lower-profile industry that carries arguably even more importance for the U.S. economy. Specifically, look out over the Pacific Ocean on any given day, and you're likely to see a line of gigantic ships stretching toward the horizon. Most hail from Asia and are headed to the ports of Los Angeles or Long Beach. On an average day, these ports send and

You see, the Los Angeles area is a key center of the U.S. container port industry, Long Beach and Los Angeles combined would be the fifth busiest port in the world, only behind four Asian ports. Container ship traffic has been growing strongly since the early 1990s in both Southern California and other key U.S. ports.

Of course, consumer goods and container shipping are just one part of global trade -- trade in commodities is every bit as important. For example, the U.S. imports more than 13 million barrels of oil per day, and Chinese crude imports have grown from zero to more than 3 million barrels per day since 1992. Furthermore, agricultural products from Brazil and the U.S. feed countries in Asia, Europe, and the Middle East. There are literally thousands of globally traded metals, agricultural products, and energy commodities.

Growth in trade should come as little surprise -- just consider the products you use every day. If you're like most Americans, many of the goods you consume are made or produced outside the U.S. Whether you own a Japanese car, an Italian suit, or simply enjoy Chilean avocados in the winter months, you're a participant in global trade.

In fact, you may be importing goods without even knowing it. For example, most American cars actually contain significant amounts of foreign-made parts. Plus, the fuel you use to power your car is sourced from all over the globe. And it's not just manufactured products -- that jar of mayonnaise in your refrigerator quite possibly contains palm oil from Indonesia, sugar from Brazil, and eggs from the U.S.

And just as you enjoy foreign goods, foreign countries are big consumers of U.S. products. In fact, while America is the world's largest importer, it's also the globe's second largest exporter. America exports agricultural products, movies, advanced technologies, and a host of other items to countries all over the world.

(1.)  The Evolution of Global Trade

Of course, importing goods is not just a U.S. centric phenomenon. Consumers around the world are increasingly buying goods sourced from distant corners of the globe. For instance, while most pundits focus on China's growing exports, the nation is also among the world's largest importers. In China, rapid economic growth spells rapidly rising disposable income. This jump in available income has been a factor in Chinese imports, which actually outpaced exports in the fourth quarter of 2007.

And global trade is likely to continue growing. Over the past three decades, most countries in the developed and developing world alike have gradually been reducing barriers to trade. Countries have reduced tariffs on imported goods and eliminated limits on certain exports. Protectionist policies once designed to favor domestic companies over foreign competitors have been softened or dismantled in many cases. While global free trade is still a work in progress, there have been meaningful steps taken to encourage trade and open up markets to outsiders.

Moreover, it's cheaper to move goods now than at any time in the past. Before the advent of container shipping in the 1950s and 1960s, shipping goods meant loading individual irregular-shaped items onto a ship. This proved inefficient, as there was no way to move many individual items at once, and securing odd-shaped goods for an ocean voyage took a great deal of time and labor.

Nowadays, items are packed into standard 20 or 40-foot long containers that can be stacked neatly on the decks of giant ships. Standardizing containers makes it easier to handle loading, unloading, and bundling cargo from multiple shippers. And the development of ever-larger and more energy-efficient container ships has made it even cheaper to transport items.

(2.)  The Benefits of Owning Shipping Companies

Rapid growth in global trade and increased efficiency certainly impacts a myriad of industries. Manufacturers can now source parts from all over the world, looking for the best price and quality. And producers of goods and commodities no longer have to sell their wares locally -- it's easy and cheap to load products onto a ship and transport them almost anywhere in the world.

But the most direct play on burgeoning global trade is the transportation industry -- companies that physically move goods and commodities from producers to consumers. And when it comes to international trade, most goods and commodities are carried the same way they were two or three centuries ago -- by ship.

Companies that own fleets of container ships charge a fee to move all those goods to wherever in the world they are needed. Meanwhile, major energy companies rent tankers to move oil from the Middle East to the U.S. for refining. Add in the growth of Chinese imports, and you can see why the shipping industry has been doing quite well in recent years.

Even better, the global transportation industry offers an attractive one-two punch for investors -- solid growth powered by rising trade, coupled with nice dividend yields.

Below you'll find an analysis of several individual stocks that are well positioned to benefit from booming global trade . . .

END OF FREE CONTENT

The remainder of this report is available exclusively to our Market Advisor subscribers. In it, our research staff provides an in-depth look at four shipping companies that stand to gain handsomely thanks to increasing global trade. This includes. . .

A crude tanker company with a fleet of nearly 70 ships that yields 27.0% for investors.

A dry-bulk shipper that is poised to gain from the increasing imports to China. Since its ships can carry a variety of goods, this company looks well-positioned and yields a solid 9.0%.

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