CONTAINER LEASING

There’s more an more companies out there offering investments in shipping containers.  It’s worth knowing that some of these aren’t all they appear to be – there’s a growing trend in this market for companies to promise great returns with zero risk for the investor.  How does all of this hold up?

BACKGROUND

In case you’re wondering how these investments work – here’s how it goes.

A company buys a shipping container on your behalf, and then leases it to a shipping company.  They offer around a 12% return for this, “guaranteed”.  This can even be more than 12% if you give up the guarantee.  Most of these companies are based in the far-east, which is understandable since that’s where the market for the actual cargo units is.  However this is just the first step in making it difficult to get any form of transparency on what’s happening.

The container gets brought back at the end of the third year of the lease, for the original capital value.  It’s insured against damage, complete loss and other mishaps.

A number of national regulators are now warning against such investments.  France’s regulator, the AMF has stated it’s own advice and has warned investors away from it.  In the United Kingdom, a similar warning has been issued the the Financial Conduct authority (FCA).

WHY WOULD A FLEET CHOOSE YOUR CONTAINER?

A single container bought from one of these companies costs around the stand price of £2500.  However you must bear in mind – why would a huge shipping company lease a single container from you, and leave you with such a great profit?  Surely it would be better for them to leverage their size to get better pricing on bulk quantities of container?  Most of these fleets will own thousands of containers already, so why would they come to you?  The administration on their side -having to buy 2 containers from this person, and another couple from that person would lead to huge overheads for such businesses.  No – instead they would just source them by themselves.

DON’T BELIEVE THE FORUMS

Ask a question about this in a relevant online forum, and you’ll soon have a so-called investor backing up the claims.  It seems to be the case though that the figures just don’t work out.

In our opinion this is only working as long as new people are joining at the bottom end – just like a Ponzi scheme, this can keep going as long as the new folks keeping coming in.

These containers get knocked around an awful lot during their lifetime. They’re not going to keep their value unless they’re in great condition, and the returns claimed are very optimistic.