Slim Carrier Financials Boost Container Leasing

The container leasing sector experienced another year of stellar growth in 2013 thanks to the continuing weakness of carrier financials, according to shipping consultant Drewry’s recently published Container Leasing report. Drewry forecasts that this trend will continue.

 
The leased container fleet (teu) expanded 7.3% in 2013, fast outpacing the 2% growth recorded by the fleet owned by transport operators, most of whom are shipping lines. This brought lessors’ share of global inventories to an eight-year high of 46%, which marked a 6 percentage point gain on 2009.

“The leasing sector’s fleet growth has outpaced that of owner operators for each of the four years since the worldwide recession of 2009,” said Andrew Foxcroft, author of Drewry’s Container Leasing report.

“This is because the changed financial climate has left the container shipping industry heavily in debt and unable to easily access capital for investment. Carriers have been forced to turn to the leasing sector to renew their container equipment fleets.”

This contrasts with the preceding five years (2004-08) when operators’ fleet growth fast outpaced that of the lessors.

While most of last year’s acceleration in the leased fleet was achieved through investment in new container equipment, it was by no means the only source of growth.

“Purchase of used equipment from cash-strapped shipping lines, by way of sale and lease-back, also helped propel the leasing sector,” added Foxcroft. “This action, together with operators’ more limited investment in new equipment, explains why shipping lines’ more recent rate of fleet growth has been so small.”

Of the various container equipment categories, lessors appear to be gaining most ground with reefers.

Drewry estimates that the leased reefer fleet doubled in the four years to 2013 and grew its share of the overall fleet from 30% to 40% over the period.

Drewry’s report highlights how rental cash returns from the lease of new equipment fell to a new low in 2013.

“Returns are now lower than they were in 2009,” noted Foxcroft. “The recent rate erosion has been due to the expansionist antics of top leasing firms, most of which are still chasing market share growth in order to maintain investor interest and draw in further capital funding for investment.”

Looking ahead, Drewry forecasts that growth in the container leasing fleet will continue to outpace that of the owner operator sector. However, the gap between the two is expected to narrow as transport operators finances improve and their commitment to a greater level of direct investment rises.

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Press Release, August 5, 2014