REEFER INDUSTRY
WorldCargo
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ready access to funds and, despite the in 2008, while Capital and Beacon are 10% on the previous high of last summer
tightening availability of global credit, has still concluding business originally placed and back below their long-term average
enabled Beacon to grow ambitiously before the year-end. This concerns con- of recent years.
during its debut year. tracts with CSAV and covers a total lease- The average cost of a 40ft reefer body
Textainer and CAI are similarly well out of up to 5000 x 40ft high cube units, peaked at almost US$11,000 during the
funded following their IPOs in 2007. Each 3000 of which are to be supplied by Capi- third quarter of 2008, which was higher
decided to enter the reefer sector because tal and 2000 from Beacon. than at any time in the past decade. It
of the growth potential it offered and re- As of mid-January, some aspects of the still exceeded US$10,000 at the begin-
main relatively well placed to raise finance financing had still to be settled, but much ning of December, but has since dipped
for further growth. Capital Intermodal and of the equipment is understood to have to less than US$9500. The drop was trig-
Seacastle, as well as established player UES already been constructed. The main prob- gered by a big fall in the cost of raw
International, on the other hand, have lem centres on a credit line extended ear- materials, with Corten Steel more than
found it more difficult to fund further lier to Capital, and valued at up to halving in price during the past six
growth in the current climate due to their US$100M, which the company reports months to around US$500/t and stain-
heavy reliance on private equity markets. has since been withdrawn. less steel declining by a similar percent-
Seacastle has faced an especially tough time, age to below US$3000/t for the highest
not least, because it is controlled by For- Price incentive grade specification. The recent down-
tress Investment Group, one of the largest One big purchasing incentive has been
US hedge fund managers. provided by the latest fall in finished reefer
Beacon Intermodal Leasing has strong financial
Funding prospects are equally mixed prices, which are down overall by almost backing from the Bank of Tokyo-Mitsubishi
for the established reefer leasing hierar-
chy. GE SeaCo, like Beacon, is able to raise
credit using the financial strength of its
joint owner GE, while TAL International
is also well placed to access public finance
as a listed company. Both have very
lengthy track records in the reefer lease
field to draw on as well.
Hong Kong-based Florens Group is
solidly backed by its Cosco Pacific par-
ent, even if it has opted to transfer its “in-
ternational” or third party fleet to man-
agement contracts in recent years, using
German KG and other private investor
funding to generate further cash for
growth. Triton too is largely a manager
rather than equipment owner, although
its long-term backers, the Pritzker family,
have huge resources and the company has
an involvement in reefer leasing stretch-
ing back almost 30 years.
Cronos is more reliant on raising pri-
vate equity following its delisting and man-
agement-backed buyout in 2007, although
it too has continued to invest strongly
throughout the past two years and has a
strong backer in the shape of Fortis Bank.
Growing share
The new entrants collectively accounted
for around 35% of all reefers delivered to
lessors in 2008, equivalent to almost
24,000 TEU (12,500 units), leaving over
40,000 TEU for delivery to the established
ranks. Amongst these, GE SeaCo and TAL
again accounted for the largest share of
investment, followed by Cronos, Triton
and Florens. These companies all achieved
some small growth in their respective fleet
sizes, but a big proportion of their recent
reefer deliveries has covered older equip-
ment disposals.
Seacastle, in contrast, cut back sharply
on the large purchasing formerly made by
Carlisle and instead focused on consolidat-
ing its recently merged operating fleet. To
this end, it is understood to have reassigned
many thousands of reefers to finance lease
during the past year, as well as selling off
some older equipment, which resulted in
a net drop of 25,000 TEU in the size of
the company’s pure operating fleet. This
was largely responsible for the slower
growth in the overall lessors’ operating fleet,
which equated to a net addition of just
12,500 TEU in 2008 and record replace-
ment of almost 55,000 TEU.
Over 30,000TEU - mainly 40ft high
cube reefers, but also including 20ft and
40ft (8ft 6in) units - were sold into sec-
ondary use by lessors during 2008, with
GE SeaCo reckoned to have accounted
for the biggest resale of old equipment,
followed by Seacastle, Triton, TAL, Florens
The PrimeLINE
®
container refrigeration unit from Carrier
and Cronos.
Transicold helps you manage energy costs and dramatically
Mixed outlook reduce carbon footprint with best-in-class energy consumption
As suggested earlier, the outlook for 2009
and the industry's highest deep frozen capacity using R-134a.
appears very mixed, with few lessors able
to match their recent investment levels.
With the optional QUEST power-saving mode (also available
However, many shipping lines are now on our ThinLINE
®
and EliteLINE
®
models), you can further cut
also worse placed to secure finance for
energy requirements by up to 50%. Contact your Carrier sales
their own purchasing programmes, with
high-cost reefer procurement increasingly
representative or visit our Web site to see how well ecology and
problematic.
economy are working together.
This has already encouraged an ap-
proach to the larger lessors, some of which
www.container.carrier.com/primeline
are now better positioned than lines to
borrow competitively. A number of les-
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reefer business for early 2009, although 0
most (including many of the newest
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names) are much less active than earlier ©2009 Carrier Corporation
in 2008.
A member of the United Technologies Corporation family. Stock symbol UTX.
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their initial bout of reefer purchasing late
January 2009 33
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