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Maritime Research

Container Shipping 2nd Edition Special Report - A Financial Health Check

June 2017

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Container industry risk assessment

 

The court receivership of Hanjin Shipping sent shock waves through the container shipping industry and even now the reverberations continue through the global supply chains ecosystem. The debacle affected not only shippers, but a vast array of vendors from ship leasing companies, port operators, container box lessors and suppliers - all felt the impact. Following these events our 2nd Edition Financial Health-Check report assesses the current state of each of the key players in the sector and identifies those over which warning signals continue to flash.

 

In this 2nd Edition special report, Container Shipping - A Financial Health Check - Macros and Micros, analysts at Drewry Financial Research Services Ltd have updated their independent assessment of the financial health of the industry.

 

Key findings from the analysis are:

  • Industry debt situation should improve as industry profitability returns. In our sample of 12 container lines, few operators have already started seeing improvements but those towards the bottom of our risk table have plenty of work ahead to mend their balance sheets.
  • Our analysis of the financial health of the operators show slight improvements are already underway. Most are likely to see better balance sheet and credit metrics if the improving profitability levels were to sustain over the next few years.

  • Gearing levels apart, the container shipping industry has remained afflicted with severe debt after investing heavily during the boom years; the expectation of a recovery in 2017 though is expected to ease the situation. Based on 1Q17 data, industry debt is already in the process of establishing a declining trend.

  • Most operators are finally reining in their capital expenses, indicating that the race to add larger vessels may be coming to an end. Similar to leverage, interest coverage has improved, as companies have reduced expenses (increasing EBITDA) and debt.

Drewry Financial Research uses a simple traffic light system to rank companies under according to their risk profiles.

We rank each company’s risk according to the following weighted parameters: balance sheet strength (45%), income growth (15%), diversification (10%), transparency (15%) and management/control (15%).


More Information

Companies included:

  • A.P. Moller Maersk ( Maersk Line)
  • China Shipping Holdings
  • CMA-CGM
  • Evergreen Marine Corp
  • Hapag-Lloyd AG
  • Hyundai Merchant Marine
  • Kawasaki Kisen Kaisha Ltd
  • Mitsui OSK Lines Ltd
  • Nippon Yusen KK
  • Wan Hai
  • Yang Ming

News

Car carriers on the up despite rising uncertainty

Car carriers on the up despite rising uncertainty
Car carrier shipping is expected to continue its recovery from the trough of 2016, supported by improving utilisation, according to the Drewry’s Finished Vehicle Shipping Annual Review and Forecast report.

Drewry launches ‘Cost Impact Calculator’ to help shippers prepare for and better understand fuel costs post-IMO 2020

Responding to the needs of Beneficial Cargo Owners (BCOs) ahead of the IMO 2020 global emission regulation, Drewry announces the addition of a new BAF formula and fuel cost benchmarking service to its range of ocean freight procurement support services.

Liner balance postponed

A gloomier world economic outlook and rising trade tensions have forced Drewry to downgrade its forecast for container demand over the next five years, according to the latest Container Forecaster.

Drewry survey: IMO 2020 low-sulphur rule exposes widespread concern about lack of fuel cost transparency

Our recent survey exposes considerable unease among global shippers/beneficial cargo owners and freight forwarders ahead of the IMO’s 2020 global emissions regulations, due to come into force on 1 Jan 2020.

Events

TOC Americas 2018

Drewry to present our trade outlook for the Americas.

Outlook for finished vehicle shipping Briefing

Join us at 0900 GMT or 1600 GMT on Tues, 20 November 2018 for an online briefing on the outlook for finished vehicle shipping. The webinar will provide Drewry’s analysis and projections for finished vehicle trade flows, car carrier fleet development, freight rate and asset value developments, as well as industry profitability. The session will be hosted by Tom Ossieur, Head of Car Carrier Research and Martin Dixon, Director, Head of Research Products at Drewry.

Container Ports webinar briefing: What container vessel cascading is heading for ports?

Join us at 0900 or 1600 GMT on Tues, 11 Dec 2018 to find out more on our latest research covering the container ports and terminals market. The session will be hosted by Neil Davidson, Senior Analyst in Drewry’s Ports and Terminals practice and Martin Dixon, Director - Head of Research Products at Drewry. Both executives will be available to take questions following a short 20 minute presentation.