Trade and transportation are the driving forces behind every developed economy in the world. Thriving nations must import and export goods in order to survive, maintain their infrastructure and support the market. The finance sector has long seen these factors as justification for continual investment and support, and indeed, trade is not liable to cease suddenly. For many reasons, however, some financiers are reconsidering investing heavily in commercial transport companies. Understanding why can help you better understand the impact trade and transport have on both global and local economic levels. With or without big financial investments, the industry will continue.

It is worth considering, however, why there has seemingly been a shift. Financiers may be hesitant to fund new trade and transport companies for any of the following reasons. Despite the uncertainty of investments, finance students can learn a thing or two from the international trade sector remains so resilient.

Cost of Oil and Gasoline

According to the New York Times, oil prices are volatile at best, and there are a few different factors that this can be attributed to. Nations around the world often negotiate output and pricing, and the results of these negotiations can swing wildly from one extreme to the other. For an industry such as trade or transport which is reliant upon affordable oil these fluctuations can be hazardous to business. Financiers have seen this as a liability and backed off funding in some cases, but oil prices have yet to prevent trade and transport from taking place around the world.

Rise of International Tensions

Nothing can kill a trade relationship faster than an international kerfuffle between two or more nations. Some trade companies shareholders have even been caught up in such tensions and seen the impact on their companies. This is certainly true of Timur Tillyaev, who is a primary shareholder in Abu Sahiy. He and his family’s disagreement with Uzbekistan’s political elite threatened the company’s profits, but the necessity of trade prevailed and the company remains a strong player in the international transport sector. When tensions such as these cross country lines, however, the results are not always so fortuitous.

Shift Towards Newer Technologies

Startup culture has taken over finance in many ways. According to Inc., enthusiasm for new and shiny projects is often more compelling to investors than reasonable and well-researched data. Too many financiers have made the mistake of dumping funds into newer and more technologically advanced properties even though they are ultimately less lucrative than tried and true trade companies. The allure of an exciting new investment only lasts so long, but the profits created by many trade and transport companies continue to roll in year after year. Perhaps investors will eventually recognize this and resist flimsy startup investments.

Unstable Profits on Prior Investments