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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

Drewry: modest outlook for container market

Drewry: modest outlook for container market
The outlook for the container shipping market remains soft despite the welcome boost of the ‘phase one’ trade agreement signed by the US and China, according to Drewry’s latest Container Forecaster.

Drewry launches new fuel advisory services for shippers and forwarders

Drewry’s freight cost benchmarking and procurement support division, is pleased to announce the launch of a new range of fuel advisory and management services designed exclusively for shippers and forwarders.

Drewry publishes first low-sulphur BAF reference price

As part of a series of initiatives aimed at bringing greater transparency to fuel costs resulting from the new IMO 2020 low-sulphur regulation, Drewry is pleased to announce the publication of its first low-sulphur reference bunker index tracker.

Ship operating costs rise on higher R&M and insurance spend

Underlying vessel operating cost inflation accelerated moderately in 2019 on higher repair & maintenance and insurance spend, while costs are expected to continue rising at a similar pace in 2020, according to Drewry’s latest Ship Operating Costs Annual.

Events

ASEAN Ports & Shipping 2020

Join Jayendu Krishna presenting the economic outlook and its impact on regional competition.

TPM 2020 Conference

Philip Damas to discuss IMO2020 and strategies for BCOs to tackle carrier contracting negotiations.

Ports webinar briefing: Net-Zero 2050 – can the terminal sector meet the goal without regulation?

Join us at 0900 or 1600 GMT on Tues, 10 March 2020 to find out more on our latest research covering the container ports and terminals market. The session will be hosted by Eleanor Hadland, 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.