• ITVI.USA
    14,270.140
    -77.460
    -0.5%
  • OTRI.USA
    22.470
    0.090
    0.4%
  • OTVI.USA
    14,258.910
    -85.130
    -0.6%
  • TLT.USA
    2.790
    0.030
    1.1%
  • TSTOPVRPM.CHIATL
    3.280
    -0.100
    -3%
  • TSTOPVRPM.DALLAX
    1.460
    -0.040
    -2.7%
  • TSTOPVRPM.LAXSEA
    2.990
    -0.310
    -9.4%
  • TSTOPVRPM.PHLCHI
    1.970
    0.010
    0.5%
  • TSTOPVRPM.ATLPHL
    2.650
    -0.300
    -10.2%
  • TSTOPVRPM.LAXDAL
    2.490
    -0.200
    -7.4%
  • WAIT.USA
    127.000
    0.000
    0%
  • ITVI.USA
    14,270.140
    -77.460
    -0.5%
  • OTRI.USA
    22.470
    0.090
    0.4%
  • OTVI.USA
    14,258.910
    -85.130
    -0.6%
  • TLT.USA
    2.790
    0.030
    1.1%
  • TSTOPVRPM.CHIATL
    3.280
    -0.100
    -3%
  • TSTOPVRPM.DALLAX
    1.460
    -0.040
    -2.7%
  • TSTOPVRPM.LAXSEA
    2.990
    -0.310
    -9.4%
  • TSTOPVRPM.PHLCHI
    1.970
    0.010
    0.5%
  • TSTOPVRPM.ATLPHL
    2.650
    -0.300
    -10.2%
  • TSTOPVRPM.LAXDAL
    2.490
    -0.200
    -7.4%
  • WAIT.USA
    127.000
    0.000
    0%
American ShipperIntermodalShippingTrade and Compliance

Seaspan CEO: Current container industry outlook better than in 2008-09

The containership lessor is looking at opportunities for sale-leasebacks with liner companies, buying ships from private equity firms that are now look to exit the container shipping sector, and investing in other assets like containers themselves.

   The current cyclical downturn in the container shipping market is “not really as bad as what [the industry] went through in 2008, 2009 when everything was really free-falling,” according to Gerry Wang, the chief executive officer of containership lessor Seaspan Corp.
   “This cycle is more moderate, with some operators being profitable, some others losing money,” he said.
   Speaking to securities analysts this week about Seapan’s 2015 financial results and general trends in the industry, Wang said in 2015 most container carriers made money and noted that “operators with a modern fleet with competitive unit cost, with good deployment structure, generally speaking, they are doing well.”
   “And for 2016, I would look at the situation to be similar to 2015. Good ones tend to be profitable; mediocre ones tend to lose money,” he added. “It’s all about the unit cost and all about the size of the vessels they operate. And at the end of the day, that defines the differences between profitable ones and the money-losing ones.”
   To grow Seaspan, Wang said the company is looking at opportunities for sale-leasebacks of ships with major liner companies, buying ships from private equity firms that are now looking to exit the container shipping sector, as well as investing in other asset classes such a containers themselves.
   Seaspan reported profits of $199.4 million in 2015, a 51.9 percent increased compared with 2014. Revenues for the year grew 14.2 percent year-over-year to $819 million.
   In the fourth quarter of 2015, Seaspan profits skyrocketed 174 percent to $76.2 million from the $27.8 million it earned in the same 2014 period. Revenues stood at $218.5 million in the fourth quarter of 2015, a 15.3 percent increase compared with the fourth quarter of 2014.
   The world’s largest containership lessor, Seaspan grew its fleet to 100 ships with over 730,000 TEUs of capacity in 2015. The company has two 10,000-TEU ships and two 14,000-TEU vessels scheduled for delivery this year and two 10,000-TEU ships and three 11,000-TEU vessels scheduled for delivery in 2017.
   Wang said Seaspan expects global containership capacity to grow 4 to 5 percent this year and 4 to 6 percent in 2017.
   Major operators are managing supply through scrapping, slow steaming and idling of ships, and Wang said the total order book amounts to about 18 percent to 20 percent of current capacity, equal to a 6 percent annual growth rate.
   However, Wang also noted there is “an element of kicking the can down the road” as container shipping companies could delay deliveries or use their options at shipyards to buy different sorts of ships such as tankers. Seaspan itself might consider delaying its 2017 new ship deliveries if the market remains weak, he said.
   Wang also expects scrapping to accelerate, particularly for ships built in the 1980s and 1990s, noting the high cost of bringing vessels into compliance with new ballast water regulations, special surveys and requirements for ships to be able to “cold iron” and use shore power sources when docked in California.
   Wang did say the current cycle is unusual because of the effect CMA CGM’s acquisition of APL parent Neptune Orient Lines and the merger of COSCO and China Shipping is having on ocean carrier vessel sharing alliances.
   Operators are “really taking their time and trying to figure out what will happen in the next three to six months,” he said.
   Rechartering of ships has been at low levels “because of the uncertainty faced by carriers,” said Wang. “Once the dust has settled, I will see more rechartering opportunities in the industry. Hopefully, we will be able to normalize to some extent.”
   Wang said Seaspan has not received requests from customers to renegotiate charters, and he attributed this to fact that the company puts “customer creditworthiness as number one criteria.”
   In September 2014, Seaspan said it was considering a possible acquisition of Greater China Intermodal or GCI, a joint venture between it, the Carlyle Group, the Washington Family, and Tiger Group Investments. Seaspan Corporation holds an 11.1 percent interest in and manages the ships for GCI. This week Wang indicated Seaspan is still working on a possible GCI transaction.

Chris Dupin

Chris Dupin has written about trade and transportation and other business subjects for a variety of publications before joining American Shipper and Freightwaves.