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International Shipholding (ISH) |
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WIKI ANALYSIS
International Shipholding operates a diversified fleet of US and international flag vessels. The company makes money by providing international and domestic maritime transportation services to commercial and governmental customers primarily under medium to long-term time charters or contracts of affreightment.[1] With its roughly 33 vessels, the company owns 14 vessels of total vessels which total comprises a diversified line of ships from military transport to coal transports.
Business Growth
ISH divides its revenues into the following operating segments:
- Time Charter Contracts – U.S. Flag primarily caters toward Pacific Ocean shipping of cars and trucks.
- Time Charter Contracts – International Flag include a variety of vessels that serve purposes as transportation of coal, Hyundai Motor Company (005380-SE) cars, and containers.
- Contracts of Affreightment a 15-year transportation contract with an affiliate of Freeport-McMoRan Sulphur LLC for which the company had built a 28,000 dead-weight ton Molten Sulphur Carrier.
- Rail-Ferry Service represent two special purpose vessels which carry loaded rail cars between the U.S. Gulf and Mexico.
- Other provide ship charter brokerage, agency, and other specialized services to all other operating subsidiaries.
Trends and Forces
ISH Military Transport Operations are Subject to Government Defense Spending Appropriation
As a shipping company that contains some operations in military transport, ISH operates under the Maritime Security Act of 1996. Under this Act, Congress makes appropriations to companies such as ISH to receive $2.9 million in the year 2011, and $3.1 million in 2012 to 2015.[2] However, since these payments are not guaranteed, any budget cuts from defense spending that results to negative implications in payments for ISH would decrease revenues for that segment. In this regard, the company currently commits eight vessels under contracts issued under the program.
ISH Operates in a Capex Intensive Industry that Favors Newer Vessels
ISH operates in an industry that is highly competitive, where newer fleets tend to receive more business due to reliability. Further, older ships require more capital expenditure and are also harder to estimate. Finally, in lieu of changes in government regulation, compliance with customer requirements may force ISH to alter or add new equipment. In this regard, ISH's average age of all vessels is approximately 12 years, with Pure Car/Truck Carrier Fleet at around 10 years.
Competition
ISH competes with other international shipping service companies such as:
- Seaspan (SSW) owns containerships and charters them pursuant to long-term, fixed-rate charters as well as seek additional accretive vessel acquisitions over the mid to long-term.[3]
- Diana Shipping (DSX) specializes in transporting dry bulk cargoes, including such commodities as iron ore, coal, grain and other materials along worldwide shipping routes.[4]
- Genco Shipping (GNK) transports iron ore, coal, grain, steel products and other drybulk cargoes along worldwide shipping routes.[5]
References
- ↑ ISH 10-K FY2010, Pg 1
- ↑ ISH 10-K FY2010, PG 4
- ↑ SSW Business Description
- ↑ DSX Business Description
- ↑ GNK Business Description
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