VTG to focus on tank leasing

Hamburg-based VTG is to concentrate its tank container business solely on leasing.

VTG to focus on tank leasing

The rail wagon hire specialist, one of the largest of its kind in the world, announced in March that it was exiting the tank container logistics business, operated through VTG Tanktainer.

The group said its tank container transport and logistics activities will be discontinued by the end of the second quarter of 2023. This will also involve closing its international subsidiaries, with the exception of the joint venture Shanghai COSCO VTG Tanktainer.

VTG said the step was necessary in order to respond to an “increasingly fraught market situation” with which VTG has been confronted since the third quarter of 2022.

“A pronounced slump in demand for transport in the chemical industry and declining freight rates – in part due to the massive increase in energy costs – has been accompanied by substantial price hikes in the intermodal segment,” a statement read.

“At the same time, freight costs can now only be planned on the basis of prices valid for between three and six months. After thoroughly examining various options, the executive board, acting in agreement with the shareholders, took the strategic decision to discontinue the logistics activities of VTG Tanktainer.”

VTG had previously signalled its intention to concentrate on tank container leasing, which is, after all, better aligned with the group’s overall business.

In November, 2021 the group agreed an asset purchase agreement with UK-based Suttons International under which Suttons would acquire VTG’s overseas tank containers, personnel, and customer contracts, including VTG interests in a joint venture with Mission Line in Brazil.

Opportunity to expand tank container leasing

At the time VTG said that in selling its overseas activities it was “strategically realigning” the Tanktainer business unit, and in the future, VTG Tanktainer would focus on the global leasing of tank containers, flanked by “integrated logistical services”.

“This sale refocuses and aligns our asset business with the strategy of the whole VTG Group,” said Oksana Janssen, chief operating officer Eurasia & Far East at the time. “It also ensures the operating business meets our long-term profitability expectations both during and beyond the coronavirus crisis.”

However, having put all its operating eggs in the European basket, VTG seems to have been hamstrung by the downturn in the European chemical sector. Hence, the decision to exit the transport and logistics business completely.

But, VTG does see this an opportunity to expand its tank container leasing business.

All leasing activities – including staff and assets – are to be transferred within the group at the Hamburg site by the end of the second quarter. Relevant offerings will in future be made available from here. VTG Tanktainer’s other facilities in Germany, Finland, North America and Singapore will be closed by the end of this year.

At 1 January 2023, VTG Tanktainers fleet stood at 6,115 units, according to latest ITCO fleet survey, though this was listed under the operators category. How many of these units will be retained by the leasing business remains to be seen.

In June 2022, VTG had new shareholders when a subsidiary of the Abu Dhabi Investment Authority (ADIA) and Global Infrastructure Partners (GIP) agreed to buy jointly a 72.55 percent stake, acquiring this from funds managed by Morgan Stanley Infrastructure Partners (MSIP) and Joachim Herz Stiftung, which held shareholdings of 57.55 percent and 15 percent, respectively.