Analysis: Shaky Toll Group still on life support
Last week’s news that NYK Line took the largest-ever impairment loss in container shipping history will come as little surprise to a desperate industry. But according to Alphaliner, there is no likelihood of another bankruptcy “at this stage” – despite a potential $35bn industry-wide write-off.
The Japanese line will record an extraordinary loss of JPY100bn ($972m) on its vessel assets – almost a quarter of its total assets.
Outside of Japan, noted Alaphaliner, most other carriers have not made the same move, even though current market values for ships are so low. But the research company said this week that the top 18 carriers may need to write off a massive $35bn in total, assuming a 25% impairment loss.
“NYK’s move could trigger a fresh review of containership asset valuations that have fallen to historical lows,” it said.
While the Panamax sector has been most affected by falling asset values – by as much as 80% below the depreciated book value – other vessel types have seen a fall of between 30 and 60% of their book value.
So what does it mean for NYK? A fairly significant impact on its full year results, but other carriers, already expecting a poor year, “will be wary to take another blow” noted Alphaliner.
“Carriers’ financial health remains weak,” added the consultancy. “All of the main carriers who have released their financial results are in the ‘grey’ to ‘distressed’ zone” – although only Maersk and OOCL are in the former.
On the upside, however, given the calls for greater transparency into the lines’ finances, the report concludes that “the likelihood of another bankruptcy after the Hanjin fiasco is low at this stage, based on Alphaliner’s assessment”.