New accounting standards effective from the start of this year have made for some massive debt increases for the world’s largest container carriers.
The application of the new IFRS 16 lease accounting standard from January 1 means long-term leases for vessels, equipment, and other assets now have to be capitalised, whereas operating leases could previously be kept off the balance sheet.
Analysts at Alphaliner have gone through the figures of the nine container carriers that have published their first quarter results to highlight the very noticeable increases in their debt obligations. The carriers covered in the analysis are Maersk, Cosco, CMA CGM, Zim, Wan Hai, Evergreen, Yang Ming, HMM and Hapag-Lloyd.
Aggregated financial debt of the nine companies rose by a staggering 50% to reach $84bn at the end of March, compared to the total debt disclosed in end December financial statements.
CMA CGM reported the largest jump in its total debt, with an increase of 117% from $9.2bn to $19.9bn. State-backed Cosco remains the liner with the largest debts, which have now soared past the $20bn mark in the wake of these new accounting standards.