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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

Capesize charter rates expected to keep increasing despite trade war uncertainties

Capesize charter rates expected to keep increasing despite trade war uncertainties
Drewry maintains a positive outlook on the dry bulk market and expects charter rates to improve from current levels, according to its latest Dry Bulk Forecaster.

Reefer container trade expansion to support freight rates

Despite moderating perishable seaborne trade growth, continued modal shift will sustain expansion in the containerised reefer trade and so support freight rate development, according to Drewry’s latest Reefer Shipping Annual Review and Forecast 2018/19 report.

Container terminal utilisation levels set to rise... trade wars permitting

The medium term outlook for global container port demand growth is positive thanks to strong underlying economic momentum across the world’s major economies, according to Drewry’s latest Global Container Terminal Operators Annual Review and Forecast.

Challenges and opportunities for the global port and shipping industry

Presentation given by Neil Davidson, Drewry Senior Analyst Ports and Terminals at the China Maritime Day Forum, 11 July 2018.

Events

Outlook for Seafarer Costs Trends Briefing

Join us at 0900 BST or 1600 BST on Tues, 25 September 2018 for an online briefing on the outlook for seafarer availability and costs. The webinar presentation will provide Drewry’s projections for the supply / demand of officers, together with the latest assessments and forecasts for seafarer costs across the main deepsea cargo vessel sectors. The session will be hosted by Martin Dixon, Director of Research Products and Latifat Igbinosun, Senior Market Analyst at Drewry.

Maritime HR & Crew Management

Latifat Igbinosun to discuss the outlook for crew costs and the implications of new technology.