Container lessor CAI International’s third quarter net profit rose 21 percent to $16.5 million, and revenue jumped 36 percent to $44.9 million as utilization rates remained strong despite a sluggish global economy.
CEO Victor Garcia told analysts that global production of containers is estimated at 2.2 million 20-foot-equivalent units this year. Last year’s production was about 2.7 million TEUs.
Garcia said demand for containers has been below expectations for this time of year. However, he said below-normal orders for containers are expected to tighten container supply and demand next year as containerized trade increases.
Normal demand growth requires 3 million to 3.5 million TEUs of new production a year, Garcia noted. About 5 percent of the industry’s estimated 31.5 million TEUs of capacity need replacement each year.
During the last several years, cash-strapped container ship lines have relied more heavily on leased boxes instead of purchased equipment. Garcia said half of the new container orders this year will be placed by lessors.
CAI hasn’t ordered new equipment since the end of the second quarter. Instead, the company has focused on sale-lease transactions or purchases of boxes from its managed fleet.
During the third quarter, CAI leased out 52,000 TEUs, completed three sale-leasebacks for 28,000 TEUs and purchased 22,000 TEUs from two previously consolidated managed fleet portfolios.
The company’s container fleet utilization was 94.8 percent in the third quarter, up from 94.3 percent in the second quarter and roughly in line with those of other lessors.