Cargo Business Newswire

Tuesday, August 5, 2014

Drewry: Container leasing sector growth increases in 2013

The container leasing sector expanded in 2013 due to continuing weakness in shipping line financials, according to Drewry's recently published Container Leasing report, which forecasts that the trend will continue.

Leased containers expanded 7.3 percent in 2013, Drewry says, outpacing the 2 percent growth recorded by the container fleet owned by transport operators, most of whom are container carriers. This brought the lessors' share of worldwide inventories to an eight-year high of 46 percent, according to the report, which marked a 6 percent gain in 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, who wrote 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."

Drewry said most of last year's growth in the leased fleet can be attributed to investment in new container equipment, but there were other reasons that contributed to the rise.

"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 said, estimating that the leased reefer fleet doubled in the four years to 2013 and grew its share of the overall fleet from 30 percent to 40 percent over the period.

On the down side, Drewry's report highlights that rental cash returns from the lease of new equipment fell to a new low in 2013.

"The recent rate erosion has been due to the expansionist antics of top leasing firms," said Foxcroft, "most of which are still chasing market share growth in order to maintain investor interest and draw in further capital funding for investment."

Drewry predicts that growth in the container leasing fleet will continue to outpace that of the owner operator sector. But the gap between the two is expected to narrow as shipping line finances improve and they commit to more direct investment.

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