Sector Watch: Shipping container stocks

While a weak dollar is bad news to some, it creates profitable possibilities for others. Case in point: shipping container fleet owners CAI International (NYSE:CAP) and Textainer Group Holdings Limited (NYSE:TGH) are both benefiting from greatly improved container leasing rates and rising fleet utilization.

The weak dollar has led to a surge in U.S. exports, and as a result, U.S. exporters are facing a shortage of shipping containers, which are the freight-car-sized boxes used to transport goods abroad. On April 10, 2008, a Wall Street Journal story noted that much of the United States (particularly the Midwest) lacks a sufficient supply of shipping containers because ones shipped overseas are not returned due to rising fuel costs.

The cost of sending a 40-foot container from California to China is already up 20% this year to around $1,500. In most cases, boxes that do come back and would have previously moved inland now never leave the coast. The container shortage is not likely to improve anytime soon since containerized trade is forecasted to rise 9% to 10% in 2008 and 2009. It is not only containers that are in short supply; there is also a shortage of chassis, which are sets of wheels and frames on container-carrying trucks. Without chassis, containers can’t be moved by truck.

CAI International is among the world’s leading managers and lessors of intermodal freight containers. At year-end 2007, the company operated a worldwide fleet consisting of 754,000 TEU (twenty-foot equivalent units) of containers. CAI International offers its customers long-term, short-term and finance . . .

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