ITCO's annual Global Fleet Report shows that demand for tank containers is still rising, even if the rate of increase is slowing as supply chains have normalised
The tank container business has experienced some sharp ups and downs over the past few years, as volatility and disruption in global liquids supply chains prompted changes to trade patterns and volumes. Many operators did very well financially for a while as tanks were retained by receivers to act as temporary storage, at a time when ‘just-in-time’ inventory management gave way to ‘just-in-case’ stockholding. At one time, as much as 15 per cent of the global tank container fleet was held on demurrage, according to the International Tank Container Organisation (ITCO).
Those conditions helped support rapid growth in the global tank container fleet, building on increases in pre-Covid years as shippers were attracted to the flexibility and safety offered by tank containers for the transport of bulk liquids and gases. However, as had been expected, the unwinding of those disruptions in supply chains and the consequent destocking by cargo owners, coupled with the high rates of growth in previous years, led to something of a cooling down in the business in 2023.
Nevertheless, ITCO calculates that the global fleet grew by 5.8 per cent during 2023 to reach 848,400 tanks in service at the end of the year, with some 56,600 new units joining the fleet from manufacturers, mostly from China, compared to 67,865 in 2022. At the same time, ITCO says, the reduction in utilisation by both tank operators and leasing companies has led to more tanks standing idle and also to an increase in the number of ageing tanks being disposed of for, a sharp increase on previous years. Nearly 64,000 tanks owned by leasing companies were said to be idle at the end of 2023, well up on the figure of 36,930 quoted for a year earlier.
ON THE WAY OUT
ITCO estimates that around 10,000 tanks were retired during 2023. The disposal of old tanks is a relatively new phenomenon; tank containers are designed for a working life of 20 to 25 years but, with careful maintenance and, when necessary, repairs, they can easily last longer, as the stainless steel barrel is both hard-wearing and valuable in itself.
More recently, though, ITCO reports that older tanks are being retired because they are wearing out, or they are too heavy compared to newer models and therefore less productive. In its 2024 Global Fleet Survey, ITCO asked members about rates of disposal, which has given it confidence in its estimate. It seems there may also have been some pent-up retirement demand, as older, smaller tanks were used for storage during the pandemic-related disruption and surging demand.
Another important factor in this equation is the price of new tanks, which depends primarily on the price of stainless steel but also on the manufacturing environment. There have been some changes in China over the past year that made ITCO reluctant to estimate production numbers by manufacturer but it is also clear that prices for new tanks are currently at a high level and may well stay that way for the rest of this year; this will make the remanufacturing of older tanks more attractive.
OWNERS AND LESSORS
ITCO’s annual survey draws data from its own membership and also from other known operators and leasing companies, as well as equipment suppliers. ITCO says that there are more than 240 tank operators in the world, the ten largest of which represent just over 50 per cent of the total fleet.
There has been relatively little change in the list of the top ten owners in recent years, though some new players have emerged in Asia. But Stolt Tank Containers (STC) remains the largest in terms of fleet numbers, having now passed the 50,000 figure and having added more than 10,000 tanks over the past four years. Hoyer has also grown in the past two years and is now the only other operator to have more than 40,000 tanks in its fleet.
NewPort retains its third place in the list, despite not having added significantly to its fleet since 2021; the company is now owned by Shanghai-based Gentco Logistics, which also owns Albatross Tank Leasing. Other leading players include the European firms Bertschi, Den Hartogh and Bulkhaul, each of which has been slowly building its fleet. A relative newcomer to the list is Singapore-based E-Way Group, which offers a range of services for liquid cargoes and has rapidly built a 21,000-strong tank container fleet. Also moving fast is Legend Global Logistics, also based in Singapore, which describes itself as a one-stop logistics provider for bulk liquid and dry commodities as well as perishables and general cargo.
In comparison with the tank container operator business, tank container leasing is relatively concentrated, with the ten largest names accounting for around 85 per cent of the lessor-owned fleet. Indeed, ITCO identifies less than 40 such companies around the world. Exsif Worldwide remains the largest of them, with more than 70,000 tanks under its control. Chicago-headquartered Exsif is part of Marmon Holdings, which itself is owned by Berskhire Hathaway.
Eurotainer kept its second place in the list of leasing companies this year, though its fleet dropped by 5,000 units; on the other hand, sister company Raffles Lease increased its fleet by 5,000 so between them they still control a larger tank fleet than Exsif. Both are part of Streem, formerly Ermewa Group, which was owned by the French state company SNCF Group until being sold to investors Caisse de dépôt et placement du Québec (CDPQ) and DWS Group in October 2021. Streem also owns Demi Container Services, which offers tank repair, refurbishment and inspection services in Rotterdam and Houston.
In general, the major lessors have not added significantly to their fleets over the past year, though GATX-owned Trifleet Leasing and Peacock Container, which was acquired by Arcus Infrastructure Partners in early 2021 and subsequently bought GEM Containers, are both growing gradually.
WHERE TO NEXT
Speaking about the results of this year’s survey, Paul Gooch, who assumed the role of president of ITCO at the start of the year, says: “The global tank container fleet continues to grow, although at a slightly slower rate in 2023 compared with previous years. This was to be expected, considering the variety of economic and geopolitical headwinds being experienced by the chemical industry, and weakness in global GDP growth.”
The industry also had to reckon with a correction after the record year in 2022, which had been fed by the supply chain disruption resulting from the Covid 19 pandemic. ITCO predicted in its 2023 report that the ramping up of production (mainly in China) to meet short-term demand was likely to result in an over-supply of tanks that would be followed by an adjustment in output. This year’s report appears to indicate that, while that prediction was true, the correction has not been as severe as expected.
As ITCO was preparing its 2024 report, the worsening situation in the Red Sea was forcing some of the major container lines to re-route their sailings via the Cape of Good Hope; ITCO says the impact of this has, so far at least, not been as severe than that experienced during the Covid-19 pandemic, though the added time for vessels to move between the major hubs in Asia and Europe is effectively adding to tank demand.
Despite the slow-down in the growth of the industry, the massive disruption and challenges in the supply chain over the past three years have proved that the tank container can play a critical role in the ‘just-in-time’ business philosophy of the major end users – the shippers. There is also evidence suggesting that with China becoming increasingly self-sufficient in chemicals, and its demand growth lower than forecast, as well as other factors, there could be a trend away from global supply chains to more local-for-local supply chains, which could present a promising opportunity for tank containers supplying less accessible markets.
As to the future for ITCO itself, Gooch says: “ITCO will continue to drive initiatives supporting safe working practices, environmental best practice, and efficiency improvements through global standards and digitalisation. But we will be more diverse and inclusive in our approach. We will also focus on expanding our geographical footprint – recognising the need to be more present and active in the Americas, India, and Asia Pacific. The location of our events and agenda content will also reflect this geographical diversity, and the need to leverage technology advances.”
ITCO has organised its regular ITCO Village at the at the upcoming Transport Logistic China event in Shanghai, which takes place from 25 to 27 June; for more information, go to www.transportlogistic-china.com.
ITCO’s 2024 Global Tank Container Fleet Survey can be consulted in full via the ITCO website, www.itco.org.
