Drewry: Lessors own more boxes than carriers and are upbeat about future
LONDON-based Drewry Maritime Research has published its latest Container Leasing Industry 2012/13 report, saying container lessors are expected to experience overall growth in 2012 but due to the slowdown in shipping market, newbuild lease rates have been slackening over the past few months. Friday, 07.Sep.2012, 00:46 (GMT+3)
LONDON-based Drewry Maritime Research has published its latest Container Leasing Industry 2012/13 report, saying container lessors are expected to experience overall growth in 2012 but due to the slowdown in shipping market, newbuild lease rates have been slackening over the past few months.
The Drewry report said the rental container fleet increased 10.6 per cent in 2011, improving on the nine per cent returned in 2010 with a 9.5 per cent compounded rate for the two years combined.
Looking ahead, the report says the industry continues to boom this year. "Up to 9.5 per cent is also being forecasted for 2012, as lease demand is again holding up well," Drewry said in a press release.
"This robust expansion has been coloured by some uneven patches when fleet growth almost stalled altogether. This occurred in the latter half of 2011 and could yet again happen later in 2012. It has been due mainly to changes in market demand and the operating dynamic of the global container transport industry, which have occurred since the downturn of 2009."
The report said uneven growth pattern has been seen over the past two years. In 2011, a container equipment oversupply was seen, leading to a "poorer-than-expected peak season performance in mid-year 2011, plus the successful (if unexpected) adoption of greater operating efficiencies by shipping companies." The latter has retained the industry's container/slot at its low point of less than 1.85:1.00, compared to an average ratio of 2:1 before 2009.
In 2012, similar malaise remains unchanged. The report said though the lessors increased their investments in the first half of the year, the peak season demand turned out to be weaker than expected, resulting in many leasing companies having newbuild surpluses and the decline of new build lease rates.
But the lessors have their upside. "The lessors' expansion has continued to outrun that which was achieved by shipping lines, and has resulted in the box lease industry winning back some share in ownership terms during 2010-11," said the Drewry report.
The lessors, not shipping companies, now actually dominate new box investment. The Drewry report said during 2010-11, the leased fleet growth was 50 per cent higher when compared with carrier-owned equipment.
Author of the report Andrew Foxcroft said: "Leasing companies have also accounted for the majority of all new investment, thereby ending a run of more than six years of shipping line domination."
One of the reasons for this is because many container carriers experienced great losses in performance and the whole container shipping industry is beset with the "continued poor fiscal state".
"By contrast, the existing mix of publicly-quoted and privately-owned leasing firms, which make up the top ranks, have all-along retained good access to competitive financing and continue to attract sizeable inward investment. Indeed, the interest forthcoming from both public and private investors has rarely been stronger," said Mr Foxcroft.
Container lessors have investors' favour, as the utilisation in box lease industry stayed above 95 per cent in 2011 and into 2012.
Facing intensified competition as well as the needs to seek cheaper financing, enhanced efficiency and greater market share, the Drewry's Container Leasing Industry report said "the present outlook is not particularly encouraging, with neither rate levels nor cash returns forecast to improve much in the coming year."
This implies that the box leasing industry cannot escape the adverse impact of the sluggish global economy, the report said.