So far, the Covid-19 pandemic has had a very limited impact on the rented portfolio, and the utilisation rate remains very high. Our Covid-19 impact report is accessible here.
It is difficult to assess all scenarios, however, since we don’t know how the pandemic will play out and how the many economic agents and governments will behave as this unprecedented situation carries on. We are hoping for a rapid recovery, although it could take several years in view of the sharp decrease in freight volumes. We cannot rule out the prospect that the ongoing situation could lead to further declines, but that is not our favoured scenario.
We have therefore identified some risks that could have an impact on our portfolio and the underlying strategy. First, lower transportation volumes, despite initiatives to shift to rail, may affect our pipeline, with new capex being postponed or even cancelled; some maturing contracts may face a longer remarketing period and experience some pressure on rental rates or contract length during contract renewals; and a bottleneck at maintenance workshops may lower the wagons’ availability. Finally, some manufacturers will reduce their production capacity in the next few months after delivering orders placed in 2018 and 2019, and, under our middle scenario, this capacity reduction will lead to a mismatch between market needs and availability for a limited period of time.
On the positive side, we must remember that freight transportation has not stopped and is still working well, even across borders, despite reduced transportation volumes. What’s more, the Covid-19 situation may end sooner than expected, in which case fundamentals would return to the pre-Covid situation by 2022 – which is why experts believe volumes could catch up pre-crisis levels. We’re convinced that our positioning and very modern fleet are an asset to the market, and that demand will be resilient. We are also convinced that our fleet operator, the largest in Europe by far, will use its best efforts to preserve our fleet.
We are in close and continuous contact with our partner and operator. Together, we are constantly assessing the potential implications of this developing situation, and ready to act.