Key risks and single stocks
No high performing industry is without its key risks. Short-term the key risk is a violent Covid-19 wave ahead of the global rollout of a vaccine forcing governments to implement severe restrictions to curb infection rates causing a significant slowdown in economic activity and shipping activity. The global equity market including logistics companies are valued at some of the highest equity valuations in many decades which naturally increases the probability of a correction. Longer term the trend in robotics and automation could negatively impact long distance shipping as manufacturing moves closer to end consumer markets, but without impacting shorter distance logistics such as last mile delivery. The logistics industry is capital intensive and as such a rising interest rate environment would most likely be negative for the industry.
For those investors that prefer more specific exposure to logistics through single stocks it is worth having a look at the top 10 holdings in the mentioned ETF. Some of the companies are well-known global companies within logistics such as AP Moller – Maersk, FedEx and Nippon Express.