Mitsubishi HC Capital to Invest $1.35 Billion in Containers Amid Rising Global Trade Tensions

Mitsubishi HC Capital is set to invest $1.35 billion in shipping containers this year through its subsidiary CAI International. This marks the company's largest purchase of 2024, driven by increased global trade volumes and geopolitical tensions affecting shipping routes through the Middle East.

Mitsubishi HC Capital's Largest 2024 Container Purchase Set Amid Middle East Tensions and Global Trade Growth

Nikkei Asia has learned that Mitsubishi HC Capital will invest approximately 200 billion yen ($1.35 billion) in shipping containers this year through group company CAI International. This purchase will be the largest of its kind in 2024.

Due to tensions in the Middle East, container ships have avoided the Red Sea and Suez Canal, extending the duration of their voyages and reducing market demand for containers. Despite this, global maritime trade volumes remain robust.

The price includes orders for the entire year. This will amount to approximately 700,000 containers, which is approximately 20% of its total holdings as of the conclusion of the previous year.

Of these, 90% are dry containers transporting household and industrial products at room temperature. Additionally, perishable consumables and medical supplies will be procured in refrigerated containers.

Mitsubishi HC Capital holds the fourth-largest percentage of marine container leasing globally, with a 13% market share. CAI International, a global leader, and U.S. company will procure the containers, which will be leased primarily to European and Asian shipping companies.

In a report, 50% of the world's containers are owned by leasing companies, which supply them to shipping companies. These companies' requirements are contingent upon market conditions and other factors.

Global Container Production to Surge in 2024 Amid Middle East Tensions and Extended Shipping Routes

Drewry Research, a U.K.-based organization, anticipates that global container production will surpass 5.79 million twenty-foot equivalent units in 2024, approximately 2.5 times the previous year's volume. This is the highest level since 2021 when the container market experienced a boom due to increased transport volume spurred by the demand for stay-at-home accommodations during the COVID-19 pandemic.

Geopolitics also contributes to increased container demand due to the high trade volume. Due to the ongoing conflict in the Middle East, numerous shipping companies have refrained from transiting the Red Sea and Suez Canal, which serve as critical connections between Asia and Europe.

Instead of circumnavigating the southern point of Africa, container ships are circumnavigating the Cape of Good Hope, which has resulted in a 20-day extension of their journeys from Asia to Europe. This has reportedly led to a shortage, as the number of containers required has increased.

U.S. Election Drives Container Demand, Mitsubishi HC Capital Plans $100B Investment Amid High Lease Rates

As the November presidential election approaches in the United States, U.S. companies have increased procurement for the year-end sales season in anticipation of increased import duties on Chinese products transported on Asia-North America routes. Consequently, the current constrained supply-demand conditions are anticipated to persist for an extended period.

Mitsubishi HC Capital entered the container leasing industry in 2014 when its progenitor, Mitsubishi UFJ Lease & Finance, acquired Beacon Intermodal Leasing, a company based in the United States. In 2021, it acquired CAI and merged the two organizations in 2023.

Mitsubishi HC Capital has reported that lease rates are currently elevated due to increased demand, and revenues are higher than in previous years. It intends to maintain its aggressive investment strategy while monitoring market conditions and anticipates placing orders totaling approximately 100 billion yen in the upcoming year.