Peter T. Leach, Senior Editor | Sep 06, 2012 11:01AM EDT
The leased container equipment fleet grew 10.6 percent in 2011, with most of the new supply ordered by equipment leasing companies rather than shipping lines, according to Drewry Maritime Research.
The supply of containers available for rent wobbled between shortage and overcapacity, however, as fleet growth almost stalled in the second half of last year when container lines lost money and cut back on new ship orders, Drewry said in its latest Container Leasing Industry report.
As a result, leasing companies are expected to buy two-thirds of the new containers ordered this year, well above traditional levels of about 45 percent. They also are acquiring boxes from existing fleets through lease-purchase deals.
The lower demand for containers in 2011, which came after an unprecedented upsurge during 2010 and 9 percent growth in the leasing fleet, took the lease industry by surprise and quickly turned into an equipment oversupply.
The oversupply continued for several months and was still not wholly redressed by mid-2012. It was triggered by a poorer-than-expected peak season performance in mid-year 2011, plus the successful (if unexpected) adoption of greater operating efficiencies by carriers, which maintained the world’s container/slot at its former low point of less than 1.85:1.00, compared with the close to 2:1 averaged prior to 2009.
Drewry said 2012 has been marked by a similarly uneven growth pattern, as leasing company investment soared again during the opening six months, before stalling again by mid-summer.
As occurred last year, peak season demand did not play out exactly as predicted, leaving many leasing companies with an oversupply of new containers and further plunging lease rates. “As in 2011, much of the growth predicted of the whole of 2012 will have likely taken place in the opening half,” Drewry 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,” said Andrew Foxcroft, author of the report. “They bought record quantities … with this continuing in 2012.”
The lease industry’s changed position is tied to the continued poor fiscal state of the container shipping industry and its limited access to capital.
“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 sizeble inward investment. Indeed, the interest forthcoming from both public and private investors has rarely been stronger,” Foxcroft said.
Contact Peter T. Leach at pleach@joc.com. Follow him on Twitter @petertleach.