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:
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%).