Historical growth of container market dating to 1985 as well as a 2010-12 outlook:
This isn't "new" news and the container companies regularly mention the 10% historical CAGR of container volumes. Still, we share the slide to visually relay the prior growth trajectory. Despite negative/slow near-term expectations, we don't think it's a stretch expect a resumption of growth in the future, albeit perhaps more modest.
The benefit for TAL shareholders is that the supply/demand situation is significantly different than that of the container industry, thanks to shorter manufacturing lead times. Per the below slide, 2009 production was limited:
We've no position in TAL (*fantastic recovery in equity value this year), but are content with our SSW/GSL exposure despite a continued barrage of mixed industry headlines, including today's lead headline from The Journal of Commerce: Container Ship Deliveries Set to Soar. A few points from the article:
- Shipyards to deliver combined capacity of 430,000 TEUs in three months
- In April alone deliveries are set to reach 150,000 TEUs, the highest monthly level recorded since mid-2008.
- “The new vessel deliveries are expected to contribute to a net fleet growth of 9.6 percent in 2010 after taking into account expected scrapping and slippage,” Alphaliner said.
- The increased deliveries will be absorbed by the recovery in global demand and the start of the summer peak shipping season as well as slow steaming.
- The main driver for demand in the second quarter was the launch of several new loops which absorbed new ships as well as idle tonnage which has now fallen below 9 percent of the world fleet, Alphaliner said.
- Asian demand to act as a catalyst as Clarksons and Alphaliner amend their 2010 outlook
- GLOBAL container volumes are expected to recover significantly from last year’s collapse as economic conditions stabilise, with stronger demand contributing to a considerable decline in the size of the unemployed fleet.
- Clarksons has revised its forecast for 2010 and now expects the container trades to expand by 7.5% this year....
Disclosure: long SSW, GSL.
© 2010 Jeffrey Walkenhorst
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