Container manufacturing booming

Rising demand will boost the financial performance of container manufacturers over the next two years, according to one leading forecaster.

Nilesh Tiwary, an equity analyst at Drewry, said annual box deliveries would grow 14% this year, 5% in 2015 and 9% in 2016 due to favourable demand-supply dynamics in the container shipping industry.

Box replacement demand would also increase over the period as more resale outlets were opened in emerging markets.

“At the same time, there has been a strong recovery in the demand for used equipment to carry one-way project-cargo shipments, wherein the container is sold to the receiver along with the cargo,” he said. “Drewry forecasts the global box fleet to expand through 2014-17 at a rate of less than 5%.”

Box makers such as Singamas Container Holdings have reported a strong peak season in the run-up to Christmas that is expected to boost returns in the second half of FY2014.

“The signs were already visible in the first half when softer demand in the first quarter was followed by a stronger pickup in the second, leading to increased container sales for Singamas of 296,000 teu in 1H14, up 17.6% year-on-year, and higher revenues of USD$679m, up 17% year-on-year,” said Tiwary.

“This helped the company maintain its position as the second largest player in the world with 18% market share.”