Dominated by a small number of large tank container operators and leasing companies, ITCO’s latest annual survey shows that the global tank container industry continues to grow. The survey reveals a growth of 10.8% in 2018 compared to 2017 resulting in a tank container fleet of 604,700 units. Since 2013 the global fleet grew by a remarkable 57%.
Converting shipments & growth in China
With a record number of new tank containers manufactured in 2018, many operators and leasing companies increased the size of their fleet.
The industry was able to absorb these new tanks by attracting new cargoes from other transport modes, such as chemical parcel tankers and drums. Domestic growth in China was another factor that caused an increase in demand.
212 Operators were active in the market in 2018 with a total fleet of 381,750 owned and leased tank containers. A smaller group of 35 leasing companies were controlling the market in 2018, owning a total fleet of 286,000 tank containers in 2018. Of this fleet, close to 15% or 42,785 units were idle, and 243,200 units were leased out to operators, shippers, and other users.
Shippers and other users, such as military and the offshore industry, owned or leased 180,165 units in 2018. Shippers would often operate tanks for specialized or dedicated cargoes, but there has been a clear trend in recent years to outsource logistics to professional operators. The shippers’ owned fleet has therefore not been growing much.
In 2018, the combined number of tank containers produced totaled 59,700 units with production expected to increase further in 2019.
Often a tank container is written off after about 20 years, but its lifecycle can be extended by refurbishing and replacing equipment. The price of steel also plays a role in decision making, but currently, Chinese manufacturers can produce new units at a low cost, to replace older ones. In 2018 about 7,000 tank container units were scrapped.
The tank container players
The top 5 operators account for over 150,637 tanks representing nearly 25% of the global operators’ fleet. The top operators with a fleet over 30,000 units include Stolt Tank Containers (39,156 units), Hoyer Group (33,881 units) and Newport/Sinochem (31,800 units). Large operators with headquarters in Asia include China Railway Logistics from China (20,879 units), Eagletainer Logistics from Singapore (8,860 units) and Nichicon Tank from Japan (8,000 units).
The top 5 leasing companies account for 179,100 tanks and about 63% of the total leasing fleet. EXSIF Worldwide is the largest leasing company with 58,000 units, followed by Eurotainer (48,000 units) and SEACO Global (43,000 units).
Since 2103 the number of operators grew by 20% while the number of leasing companies has been rather stable. Growth in the industry is providing opportunities for smaller players to enter the market. These new entrants often focus on specialized business opportunities in their region.
Manufacturing is concentrated in China and controlled by a handful of companies. Only two manufacturers are not from China, namely Van Hool from Belgium, and Wellfit Oddy from South Africa. CIMC Group from China was the largest manufacturer in 2018, manufacturing a total of 29,500 units.
You can review the full report from The International Tank Container Association (ITCO) on their website.
Market outlook & trends
At their 2Q19 briefing the largest operator in the world, Stolt Tank Containers, described the market outlook to be promising, with a pick-up in activity seen in multiple markets. Volumes are beginning to recover, after the softening of markets that started in 3Q18.
However, Stolt Tank Containers experienced pressure on margins due to the oversupply of tank containers and a slowdown in global trade.
Ocean freight rates are also expected to increase due to Ocean carrier consolidation and the new IMO2020 regulations. Certain markets are also facing tighter ocean freight capacity. Trade tensions, which is a major discussion point at the moment, seem to be affecting trade flows, but not volumes.
Stolt is one of the few companies that is managing both parcel tanker and tank containers resulting in a more leveraged business model to deal with market fluctuations. When the economy is in good shape, there may be an increasing demand to ship large volumes, which may benefit parcel tankers operators. However, during bad times shippers may want to ship smaller lots which may benefit tank container operators. On top of Stolt and Sinochem, MOL Chemical Tankers has in February 2019 acquired a 20% stake in Den Hartogh to offer services comprising both tank containers and chemical parcel tankers.
Many logistics companies offer different transport mode options, such as flexitanks and drums.. However, Stolt decided many years ago to stop their flexitank business due to safety and environmental reasons, but also because they are a competing unit with tank containers.
Tank container alternatives
Users will need to evaluate if they should transport their goods in tank containers or other packaging units. Compared with drums, a tank container can be up to 40% lower in cost on a door-to-door shipment, for example. While for non-hazardous liquids flexitanks may be a good alternative. In case of a larger volume, a shipper may want to opt to move his goods in chemical parcel tankers.
On top of the technical capability at loading and unloading facilities, a fair comparison of different transport modes must include volumetric efficiency, handling and storage fees, delivery costs, empty returns, product losses, cleaning and recycling. There are also environmental considerations such as the risk of product leakage and disposal of packaging material.
The tank container industry continues to grow and will try to drive cargoes from other transport modes to tank containers. We recommend customers to analyze all possible transport modes and make a correct comparison of all options to create an efficient and sustainable supply chain at the lowest cost.
Photo Credit: Rudigerstal