Category Archives: Shipping Industry Forecast 2013

Pacific Tycoon offers shipping industry forecasts for 2013, that will offer investors some investment insight as the sector continues to evolve and recover.

Overcapacity And Lower Rates Will Not Hurt Pacific Tycoon Returns

pacific tycoon container investmentsWidely recognized as a valuable contributor to the international container shipping industry, Pacific Tycoon has leased shipping containers to leading manufacturers and shipping lines, for more than half a decade. In doing so, Pacific Tycoon has consistently delivered steady returns to its container investors and business partners, regardless of the performance of other asset classes or the ongoing political turmoil and/or economic uncertainty. With that being said, the remainder of the international investment community is wondering how Pacific Tycoon and container investments are able to maintain profits and sustain strong growth year after year, particularly in a global market that is facing financial challenges and an industry facing the looming threat of over capacity.

The fact of the matter is, shipping containers must be leased to deliver consumer goods to ports around the world and encourage steady global economic growth/recovery, regardless of whether Maersk ordered too many new vessels before the Global Financial Crisis or that container lease rates have dropped on some trade routes. The shipping industry is a resilient business and shipping containers are at the foundation of it. As such, investors can be certain of two things:

1. Shipping vessel over capacity does not affect cargo container demand. Brought on by the introduction of new shipping container vessels that were ordered before the downturn, the shipping industry has been battling overcapacity since the financial crisis struck in 2008-2009.

Even though this overcapacity has driven spot rates on some of the main routes to low levels, demand in the container industry is not affected by the overcapacity and instead, is expected to experience growth of 2 to 3 percent in 2013. In the future, the performance of the industry is expected to be more closely related to the performance of the global economy and not the number of shipping vessels in service.

2. Shipping container industry leaders are demonstrating strong growth and profits.
It would seem that Maersk’s efforts to cut its fleet container capacity by about 1 percent between the second quarter of 2012 and the same period this year, have not been mirrored by the other leading container carriers like the Mediterranean Shipping Company (MSC) or Textainer, who are still working diligently to increase their share of the international cargo container market. In fact, analysts suggest that it is possible that in three years, Maersk Line could lose its title as the world’s largest container shipping line to Mediterranean Shipping Company (MSC).

Widely recognized as the world’s third-largest container company, Textainer has recorded solid profits and continued to invest in new and used containers; bringing the company’s fleet to nearly 3 million TEU. Continuing a strong pace of expansion, Textainer invested $629 million in new and used cargo containers in 2013, following a $198 million investment into new shipping containers in the fourth quarter of 2012. So far for 2014, the company has immediate plans for an investment of $10 million in new containers.

The truth be told, shipping container investments, like those offered by Pacific Tycoon; are certainly not a new investment opportunity. In fact, they have been a carefully guarded investing secret of institutional and affluent investors, for more than 50 years. It was only after the global financial crisis struck in 2008-2009, and those select investors needed to liquidate the low-risk assets in their portfolio to cover the heavy losses sustained in their traditional holdings, that private investors were finally given the opportunity to review container investments and profit from the introduction of alternative investments.

Although container investing has emerged as a viable alternative to equities and other traditional investment offerings, there are some in the investment community who still remain apprehensive. This is understandable. The fact is, it has been because of the limited availability of shipping container investments in the last half-a-century, that some investors have found themselves wondering if it is a scam or not. This apprehension has lead to more questions, which has in turn resulted in more research and lead to more intelligent information, particularly with regards to the great reasons to invest in shipping containers.

Maybe Not Time For Recovery But Its Right Time For Investing

trade routes asia africaEncouraged by a rising demand from African consumers for mobile phones made in China, as well as by a sharp rise in the demand for commodities in Asia in general, cargo volumes from Asia to Africa are experiencing remarkable growth. In some instances, these incredible traffic figures are increasing two to three times faster than volumes between Africa and Europe; or even Africa and North America. This thriving trade between China and Africa, has created circumstances that have resulted in extremely profitable business opportunities for investors and shipping companies; from all corners of the world.

In Hong Kong for example, Tribini Capital and Mandarin Shipping both purchased container ships from distressed investment firms in Germany, with the intention of immediately chartering the vessels to shipping industry leaders already operating on the busy Asia and Africa trade route. The first two ships acquired by Mandarin are 2,100 TEU container ships equipped with cranes, that are currently sailing the trade route between South China and Africa. The container vessels were purchased because of their ability to serve niche markets across the African continent, where that type of container ship is well-suited for restricted-draft ports and are helpful in places where their cargo handling gear is needed to accommodate the loading and unloading of cargo.

Although neither Tribini Capital nor Mandarin Shipping has expressed an interest in exclusively focusing on the container ship sector of the global shipping industry, they did communicate that they “do see opportunities there, given the current problems in the German KG market” (Mandarin Shipping Director). In fact, Tribini Capital has told their investors that they can expect an internal rate of return of (more than) 20 percent, as a result of these purchases and favorable trade market conditions.

I don’t think it is the right time for a recovery in shipping, but it is the right time to buy assets.”- Tribini Capital