The container leasing market is expected to normalize through the first half of the year as shipping lines find their current fleets are sufficient for the weakened ocean shipping sector and look to offload older boxes, according to the head of container lessor Textainer.
Although some shipping lines are holding onto spare container capacity ahead of an expected pickup in demand in the second half of the year, most are finding they no longer need the quantity of containers they possessed throughout the historic, two-year surge in demand, Textainer CEO Olivier Ghesquiere said Tuesday during the company’s fourth-quarter earnings call.
“So, we certainly see a situation where we have no new containers being added to the fleet,” Ghesquiere said. “I think that’s a very fundamental aspect of our industry that supply and demand tends to adjust very quickly, because the lead times to produce new containers are so short.”
Holding onto extra containers won’t hurt the short- to medium-term bottom line of ocean carriers, Ghesquiere said, but it also means that demand for new orders has nearly ground to a halt, potentially keeping many box factories closed through the first quarter of 2023.
Ghesquiere called the last two years “a pivotal period of growth” for the container leasing industry and said Textainer used the time to expand its core fleet of long-term lease contracts with fixed-rate financing. Those leases helped the company achieve record revenues in 2022 and will keep Textainer resilient through the first half of 2023 despite the market pullback, he added.
Textainer saw somewhat higher volumes of container redeliveries in October and November, but an easing in December and January. Although Textainer’s fourth-quarter lease income of $203 million slipped 1 percent from the third quarter, full-year income of $810 million was up 8 percent year over year.
“While the fourth quarter resulted in the much-anticipated normalization of the retail market, several developments point to a return to greater predictability, and we feel optimistic that the container leasing market is now showing multiple positive signs of stabilization as we are entering into 2023,” Ghesquiere said.
Source: Journal Of Commerce