Investing in a Container

Sensible or a scam? I've received an email from someone wanting to know, does it make sense to invest in a shipping container, managed offshore by some company with a dubious reputation.

The short answer is, it makes no sense at all. But not for the reason you may be thinking, that it's all a scam and whoever is selling you the idea is going to run off with your money (but they might, you have to be careful). Container transportation has been around for a while and these containers do have numbers and they can be insured. Large companies do own fleets of them and they do manage containers as well. If you buy one or many, this container will disappear into the fleet and become just another number, being hired out to house cargo travelling the world.

But what happens to that container when no longer needed or the management company goes bust? At worst you'll lose the container all together, but the best that may happen is you'll have to pay for it to be delivered to you and then what will you do with it? It gets worse if you own several.

There are many angles, claiming depreciation on the container, whether the container is leased long term to a shipping company, what condition it is maintained in, how it is handled and what kind of container exactly; high cube, flat rack, 20 foot, 40 foot, open sided, open topped, all these have a demand and risk factor attached and differing returns.

Why do this to yourself when you can simply invest in a container company? For the purpose of illustration, consider Royal Wolf who are listed on the Australian Securities Exchange:

https://www.google.com/finance?cid=8109809

Currently they sit on a dividend yield of 3.70%, with a market capitalisation of AUS$135 million. They're active selling and hiring out containers and with a P/E of 18.33 are not expensive by any means. I'd suggest that investing in this company would be safer and provide returns that are better than directly owning the container itself. Think capital gains. But heh, I'm not pumping this stock, just pointing out there are safer ways to go that would be more financially rewarding.