New container leasing company launched as global lease rates come under pressure

CARU Containers and TCG (Transportation Capital Group) have formed a new container leasing company that will operate worldwide under the name CARU Specialized Leasing.

The CARU Specialized Leasing management team will be led by Frank Vaughan, Tim May, Rick Reid and David Sprod, who average over 25 years of international container leasing experience, including specialized container leasing.

The new company will focus on leasing non-commoditized containers and providing the product expertise and high service levels required by the operators of specialized equipment.

It will rely on the combination of skills, experience and financial backing of CARU Containers, TCG and the management team to rapidly expand its global platform and capabilities.

The Dutch company, CARU Containers, is one of the world’s largest container traders with over 20 years of experience in container leasing and trading. CARU Containers maintains offices throughout Europe, the US and Asia.

TCG has over 20 years of experience in the container industry and manages significant container investment portfolios. The TCG principals have worked with the management of CARU Specialized Leasing for over 20 years.

All three parties provide the company with a strong capital base to fund future growth and aim to establish CARU Specialized Leasing as the partner of choice for its customers and suppliers.

However, container equipment rental rates have come under renewed pressure since 2014 and by mid-2015 new dry freight pricing was at a 10-year low, whilst lease rates had fallen to an all-time low, according to the latest edition of the Container Leasing report published by global shipping consultancy Drewry.

Similarly, used dry freight container prices have also reached a five-year low, largely in line with the decline in new equipment costs and also because of increased resale volumes.

Andrew Foxcroft, Drewry’s lead analyst for container equipment said: “The outlook for 2015 is for the annualized average rental price of container equipment to drop further and reach its lowest point in more than a decade, with no improvement predicted for 2016.”

The leased container equipment fleet increased in size by 9% during 2014, a faster pace than 2013 and well above the growth trend recorded for transport operators. Shipping lines’ owned fleet increased by less than 4% in 2014, which compared with less than 2% per annum for 2012-13 combined and thus remains at an historic low.

The lines’ continued weak fleet growth is attributable to their enduring financial weakness, with this improving only slightly during 2014-15 when the impact of lower operational costs brought some much needed fiscal relief. By comparison, the box lease industry has still been able to access competitive funding.

All of the current top 15 container leasing companies have changed ownership, been started-up or undergone some major financial restructuring during the past decade, with one large fleet merger due for completion in 2015.

The entire lease industry is also facing up to a tougher market climate in 2015. Cash returns from new equipment lease stayed flat through 2014, and into 2015, and per diem rates have continued to slide in step with the recent decline in new box pricing.