Disclosure: Some of us own this.
Fairfax made news last year with its large equity and debt investment in Seaspan Corporation (SSW). David Sokol, Chairman of Seaspan, has been making sweeping changes as was normally the case when he was put in charge of Berkshire Hathaway’s ailing businesses such as NetJets and Johns Manville. He has had a fascinating career with this Fortune article covering some of the highlights (but not the subsequent lowlight of resigning from Berkshire) - http://archive.fortune.com/2010/07/29/news/companies/buffets_mr_fixit_full.fortune/index.htm
On that note, we recently came across this video:
…where Sokol discusses how the container liner industry undergoing a structural change, and how Seaspan is trying to position itself for this change. Following this, we read Seaspan’s investor day transcript (https://seaspan.gcs-web.com/static-files/7650b914-fcfc-4476-9cb2-8ec9924b71ed). Some interesting notes:
-Sokol believes the liners will become more like UPS and FedEx, in that their value-add will be much more in the logistics of aggregating shipments with multiple end-points, rather than what has historically been simple A-to-B routes. Companies such as Seaspan may do a lot of the aggregating for the liners, which are typically the only companies that buy the ultra large container ships (used for long-haul routes to and from ports with sufficient infrastructure).
-The more flexible the liners are to their customers, the more flexible their lessors (such as Seaspan) must be.
-The lessor industry is made of ~75% financial owners, which are typically not operations-driven or outsource their operations altogether to third-party operators. Of the remaining ~25% of the market, Seaspan has approximately 35% market share.
-Container shipping is a relatively new industry, and globalization would have been impossible without it. Though, anyone who has read The Box would have already known that!
We also recommend taking a look at their November Investor Presentation - https://www.seaspancorp.com/wp-content/uploads/2018/12/SSW-Investor-Presentation-v00Final.pdf
I guess the next step is to learn about the history of FedEx/UPS…