A new report from Drewry’s investment research arm, Drewry Financial Research Services Ltd., examines the financial health of the global container shipping industry.
Independent assessment:
In the report, Container Shipping – A Financial Health Check – Macros and Micros, Drewry analysts have updated their independent assessment of the industry’s financial health, identifying lingering areas of concern and even signs of hopes for the sector.
As reverberations from the Hanjin Shipping fallout are still felt through the global supply chains ecosystem, the debacle continues to affect not only shippers, but vendors from ship leasing companies, port operators, container box lessors and suppliers, according to Drewry.
Key players assessed:
The report assesses the current state of each of the key players in the sector and identifies those over which warning signals continue to flash.
According to the report, the industry’s debt situation is expected to improve as industry profitability returns. In Drewry’s sample of 12 container lines, several operators have already started seeing improvements, but those at the bottom in the risk table have plenty of work ahead to mend their balance sheets.
Improvements seen:
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.
Riddled with debt:
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 Q1 2017 data, industry debt is already in the process of establishing a declining trend, the report found.
Most operators are finally reining in their capital expenses, indicating that the race to add larger vessels may be coming to an end, Drewry said. Similar to leverage, interest coverage has improved, as companies have reduced expenses (increasing EBITDA) and debt.
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Source: Drewry
