The Hanjin bankruptcy reduced Textainer’s lease rental income by US$4.8M, increased container impairments by US$22.2M and bad debt expense by US$17.1M. Container impairments consist of a US$17.4M write-down in the value of finance leases, and a US$4.8M impairment for unrecoverable containers (net of insurance proceeds). Textainer has not actually written off any containers yet, and expects to recover some 70- 90% of the containers it leased to Hanjin, which is calculated to be in the region of 150,000 TEU.

Triton, now the world’s largest leasing company after its merger with TAL closed in July, booked a loss before income taxes of US$56.8M in Q3, while the adjusted pre-tax loss was a much lower US$2.8M. Losses from “Hanjin impacts” in the quarter amounted to US$29.7M, including a US$23.4M provision for bad debt and US$6.3M in lost revenue.

Brian Sodney, Triton president and CEO, said it is a “major operational effort” to get its boxes leased to Hanjin returned, but good progress is being made. By mid-November it had gained control or issued delivery clearances for almost 50% of the containers, and expected to have recovered around 70% of the boxes by the end of 2016.

The Hanjin crisis has hit both companies hard, but the silver lining is that it has taken almost 1M TEU out of circulation, tightening the market and pushing up new lease prices by around 10%. Rates are also being driven higher by rising new container prices, which are expected to increase further as manufacturers switch to waterborne coatings. Expecting a price rise, Textainer went on something of a shopping spree in Q3, spending around US$470M purchasing over 285,000 TEU of “attractively priced new and used containers”, said Philip Brewer, president and CEO.

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This complete item is approximately 1000 words in length, and appeared in the November 2016 issue of WorldCargo News, on page 22. To access this issue download the PDF here.