Seaco’s view on North America

THINGS WILL GET BETTER

HCB: Has Seaco been able to increase its rates in view of demand changes? Are operators/shippers taking more tanks from lessors?

TANK LEASING • HOW HAVE RECENT SUPPLY CHAIN DISRUPTIONS AFFECTED TANK LESSORS IN NORTH AMERICA? HCB SPOKE TO RON DOYLE, SEACO’S VP MARKETING & CONTAINER SALES, AMERICAS, TO FIND OUT

HCB: How has supply chain disruption affected the tank leasing sector? Do delays caused by factors such as port congestion and driver shortages (especially in the US) mean demand increases?

RON DOYLE: The market experienced a spike in leasing activity towards the end of the third quarter 2021 as a result of customers seeking to reduce the risk of expected tank imbalances across the globe and ensure their products continued to move.

There is something of a dichotomy in the market: albeit softening somewhat very recently, port congestion combined with driver shortages increases demand due to the supply chain inefficiencies; on the other hand, limited vessel space and higher ocean freight rates reduce demand. Customers see no reason to increase international tank containers in their fleet if they cannot get space from carriers or can source regionally to avoid historically high ocean freight levels.

Subsequently, customers are not returning units and the majority anticipate an uptick in imports/exports as congestion issues ease and freight costs return to a more ‘normal’ level. They prefer to maintain their current fleet size in the short term, expecting increased demand and activity in 2023.

AVAILABILITY OF THE APPROPRIATE EQUIPMENT WILL

BE KEY TO HANDLING THE ADDITIONAL VOLUMES OF RD: Rates are on the rise, driven more by an increase in original equipment costs (OECs) than as a result of increased demand at this time. In terms of newbuild tanks, Seaco continues to invest strongly in this asset class and across all tank types in line with market demand.

Shippers are well aware of the tight market globally for equipment and, even with the current economic uncertainty of a recession, the overall expectations are that business will recover and international activity will ramp up as the congestion issues continue to improve. As many look to source materials and products on a much more regional level, avoiding transpacific and transatlantic movements, we have seen more North American firms seek tanks for storage and domestic traffic than ever before. HCB: What is your view of the outlook for the tank leasing sector in the near- and medium term, given the potential for economic and geopolitical uncertainty?

RD: Most customers believe their fleets are well sized for the near term (next six months) and that they do expect to increase their fleet or replace older tanks with newer tanks in 2023 and beyond (medium term). For specialty chemicals and most raw materials and with many of their final products somewhat recession-proof these will be in continued demand no matter the economic uncertainty. www.seacoglobal.com