AlixPartners: Some carriers struggling to pay for capex, debt

The consulting firm’s Hong Kong director says a proportion of carriers are still not generating enough cash to pay for ship building programs, or worse, to pay off debt, though the industry as a whole is getting better financially.

Information derived from American Shipper |  By:  Eric Johnson  |   October 16, 2015

The container shipping industry is gradually improving its financial performance but vulnerabilities remain for select carriers, according to AlixPartners’ Hong Kong Director Brian Nemeth.  Nemeth said in a presentation at the TPM Asia conference in Shenzhen Wednesday that seven carriers had negative earnings before interest, tax, depreciation and amortization in 2011, a number that had fallen to just one in 2014.

Nemeth noted, however, that five carriers are currently not generating enough cash to pay their debts, though the industry as a whole is relatively healthy in this metric.

Finally, Nemeth said a number of carriers didn’t have enough cash from operations to finance newbuilds between 2011 and 2014, meaning they had to seek outside sources of funding for capital expenditures.

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container ships docked in port