Trencor-associate Textainer is optimistic about world trade in 2019

Trencor-associate Textainer Group, which leases shipping containers, says world trade should continue to grow in 2019, despite disputes between major economies.

While the US’s trade war with China is reportedly nearing a conclusion, President Donald Trump is said to be shifting his attention to trade with the EU and Japan.

The International Monetary Fund (IMF) said earlier in April that the world economy would probably grow at just 3.3% in 2019, from 3.6% the previous year, partly because of trade tensions.

But Bermuda-based Textainer, which is 47.5% owned by JSE-listed Trencor, said in its annual report that the global economy was likely to grow by 3.5% in 2019.

“And we project container demand will continue to expand at a similar pace,” Textainer said.

“Despite ongoing trade disputes, the outlook for GDP growth and container trade is positive,” the group said.

Container production was likely to be supported “by slower but continued trade growth, the need for container fleet replacement and attractive new container prices”.

Meanwhile, Textainer said major shipping lines produced “mixed” financial performances in 2018, with profitability dented by volatile freight rates and fuel costs, as well as ongoing excess vessel capacity.

In 2019, shipping lines were expected to ramp up their efforts to comply with new emissions rules.

“Compliance with these regulations will require significant capital investment in ships and/or higher fuel costs for low-sulphur fuel.

“The shipping lines’ ability to pass these higher costs on to shippers through fuel surcharges and higher freight rates is essential for their financial performance and this issue will continue to evolve in 2019.”

hedleyn@businesslive.co.za