Drewry examines carrier financial health

Drewry examines carrier financial health    Drewry Shipping Consultants on Tuesday launched a product that aims to give shippers and intermediaries an insight into the financial health of major shipping lines, plus a selection of airlines and logistics companies.
   Among the items in Drewry's new Freight Shipper Insight is a Z-score table, which measures the financial stress that transportation and logistics providers, and their parent companies, find themselves in. The Z-score method, developed by U.S. economist Edward Altman in the 1960s, 'uses statistical analysis to predict a company's probability of failure in the next two years, using data from a company's financial statements,' Drewry said.
   Drewry's table measures the health of 25 companies for which financial data is available. Among the 18 shipping lines analyzed, only OOCL and Maersk Line are above the so-called 'distress zone,' in which the objective tool indicates there's a high risk of the company going bankrupt.
   The score, it should be noted, measures the health of the parent company and not just the liner operations. So a liner carrier that is performing poorly could theoretically be saved by the relative health of the parent company.
   Other lines included in the table (in the order in which they finished) were: Matson, APL, CMA CGM, Horizon, MOL, Evergreen, COSCO, Wan Hai, 'K' Line, NYK Line, Hyundai Merchant Marine, Hanjin Shipping, China Shipping, Yang Ming, CSAV and Zim (which finished last out of the 25 companies measured).
   The table considers a company's revenue, assets, liabilities and book value in determining a score. As one might presume, companies that are light on assets and liabilities fare well.
   The only three companies to finish in a 'safe' position were logistics companies C.H. Robinson, Panalpina and Kuehne + Nagel.

Heaney

   'Most of the ocean freight related companies tracked in the Z-score financial stress index have low Z-score ratings, as do most airlines, whereas major freight forwarding companies have very safe ratings,' wrote Freight Shipper Insider editor Simon Heaney.
   The financial statements used to produce the score were either January-through-September or half-year 2009 results, except for French line CMA CGM, with 2008 full-year figures the latest available.
   'It should be noted that the Z-score index uses the most recent financial performance figures available but it may not fully represent the current situation as not all companies monitored provide regular quarterly reports,' Heaney said. 'For example, the last filed report from CMA CGM was its 2008 annual. A lack of available data also means that major carriers such as MSC, Hapag-Lloyd and Hamburg S'd cannot be included in the survey.'