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• ``We see the recent results reported by shipping companies as a potential indicator of future container ABS performance. This week, A.P. Moller-Maersk A/S (Maersk) reported its 2011 profits were diminished by challenges in container shipping. While Maersk shipped 11% more containers, lower shipping rates (combined with higher fuel costs) pushed its liner business to a loss. Maersk`s fleet ships approximately 16% of global container shipping capacity,`` said Fitch, in a report. It further said the following:Events in the shipping industry directly influence container ABS performance. The current oversupply of ships is supporting container utilization rates. Maersk`s most recent report says it plans to use `super slow-steaming` more extensively, which lengthens transit times of containers and pushes up utilization rates. However, shipping companies are the lessees of containers. Weakness in their sector also pushes down lease prices, it said.

• Over the long term, prolonged weakness in shipping could directly increase the risk of ABS container performance. The shipping industry is highly concentrated, with the top eight companies by 20-foot equivalent (TEU) representing more than half of the industry. If one of those very large companies should cease operations, a large number of containers could require re-leasing in an environment with fewer lessees. And recovering containers from all over the world and in a range of legal environments could be time consuming and costly.

• We view global trade flows as the primary drivers of performance in container ABS. World gross domestic product (GDP) is the best proxy for it. Container overproduction is a key risk for container ABS, it said. Unlike shipping vessels that require long lead times (a main factor in today`s vessel glut and, therefore, low shipping rates), the barriers to container production are very low, and they can be produced quickly. Overproduction of containers could lower utilization rates and further depress lease rates.

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