Smart devices have the ability to significantly transform the utility and value of shipping container equipment assets, according to Drewry’s latest Container Census & Leasing Annual Review & Forecast 2019/20 report.
Namely, smart containers have expanded in prominence in a very short space of time and the pace of adoption is expected to be faster over the next five years. According to Drewry, a container is considered ‘smart’ when equipped with a telematics device that provides real-time tracking and monitoring. This allows operators to increase turn time of their container equipment and so utilisation. It also enables beneficial cargo owners (BCOs) to understand the location and status of their cargo so that they can better control their supply chains.
There are a number of factors driving this market growth, including growing calls for greater transparency and security across transport value chains. Meanwhile, in shipping there is a demand to know the location of the container and above all the status of that container and the condition of the cargo inside it
explains Drewry’s director of research products Martin Dixon.
What is more, Drewry estimates that by the end of 2018, around 2.5% of the global container equipment fleet had smart technology devices. However, take-up varies considerably by equipment type, with penetration already strong in intermodal and reefer containers but much lower in the dry box sector.
Now, Drewry predicts that the number of smart containers in the global fleet will triple in the five years to 2023, reaching more than 2 million units, representing about 6.5% of global box inventories. As technological innovation reduces the cost of devices and rises their value to BCOs, uptake is expected to accelerate.
Some equipment manufacturers and leasing companies are already planning to supply equipment fitted with devices, and such practices are expected to become widespread among other industry players.
Uptake in the latter is expected to be significant, as the rental sector is leading in container equipment investment and ownership, as it controls more than half the fleet and expected to extend their share to over 55% by 2023.
In the meantime, container equipment rental rates have become more weak through the first six months of 2019, after two years of recovery from the depths of the market in 2016. However, Drewry adds that they still have a long way to go if they are to return to the returns seen in the earlier part of the decade.
We expect lease rates to ease back over the near term on slowing growth in global trade and so demand for containing equipment. However, with newbuild prices also falling cash investment returns are expected to remain stable
Concluded Mr. Dixon.