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Maritime Research

Container Shipping COVID-19 Special Report, Financial Health Check

July 2020

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COVID-19 industry risk assessment

In this 50-page special report, our Maritime Financial Research team provide a detailed, independent assessment of what impact the coronavirus (COVID-19) pandemic has had on the financial health of the container industry and major companies providing liner/box shipping services.

 

Given the pre-COVID-19 industry context of weak balance sheets, ballooning debt and excess capacity, this report will be essential reading for key market stakeholders and participants whether financial institutions, investors, port operators or international forwarders and shippers.

 

Key findings:

  • The container industry is likely to be the shipping sector most affected by the COVID-19 pandemic, with global box trade set to be heavily impacted by disruption to the world economy, consumer activity and supply chains
  • Financial health remains weak and uncertain exacerbated by downgrades in global growth for 2020
  • In our sample of 14 container lines, few inspire confidence with respect to financial or balance sheet strength. Most have seen a deterioration in their balance sheets with increasing gearing in the past several years
  • The industry is already over-leveraged, driven partly by IFRS 16 lease accounting changes and carriers’ vertical integration strategies
  • Ballooning debt and years of negative cash flows, in the context of the current crisis, raise questions about future business viability
  • High levels of debt not only damage long-term profitability and shareholder returns but have significant implications for key stakeholder groups (customers and vendors)

Areas of analysis:

  • Is the macro trend supportive
  • What does the overall financial health of the industry look like
  • What has been the overall trend in the first quarter of 2020
  • Which among the sample, top 14 container lines instil confidence with respect to financial or balance sheet strength
  • How do the company financials measure-up
  • Which carriers have boosted liquidity and how viable do their future commercial models’ look
  • Which carriers are the most vulnerable

More Information

Companies included:

  • AP Moller Maersk 
  • CMA-CGM
  • Orient Overseas International Limited (Cosco subsidiary)
  • Wan Hai Lines
  • Evergreen Marine
  • SITC International
  • Samudera Shipping Line
  • Hapag-Lloyd
  • Cosco Shipping Holdings
  • Hyundai Merchant Marine
  • Yang Ming Marine
  • Ocean Network Express (ONE)
  • Pacific International Line (PIL)
  • ZIM Integrated Shipping Services
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