Iran Deal Pullout Worries Shippers

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The recent developments in the Iran nuclear deal has put shipowners in a spot. The US decision of pulling out from the nuclear deal has raised concern over a potential oil price rise and further raise operational costs, says a report by Taipei Times.

Oil prices would be the key factor affecting Yang Ming Marine Transport Corp’s profitability this year, company chairman Bronson Hsieh said, adding that as of last month, oil prices had risen by an average of 20 percent from a year earlier.

Oil production cost

US President Donald Trump last week announced that the US would pull out of a landmark deal that was designed to limit Iran’s nuclear capabilities, although the UK, France and Germany would remain. Trump reinstated US sanctions that could curtail Iran’s ability to export oil.

It remains to be seen if Iran’s oil production will be affected by the US’ decision, but the US could increase its shale oil production to help balance oil prices, Hsieh said.

Hsieh made the comments on the sidelines of a news conference last week, at which the government announced that it aims to establish an overseas holding company in Singapore by October to develop shipping businesses in Southeast Asia.

Factors affecting price rise

It is difficult to estimate the effects from rising oil prices on Yang Ming, as factors such as cargo volume and cargo transportation service prices need to be taken into consideration, Hsieh said.

The global vessel tonnage supply is estimated to increase about 6 percent this year, whereas cargo volume could rise 5.1 percent from last year, Hsieh said, adding that as such, there is slightly more supply in the shipping industry than demand.

Yang Ming and several other global sea liners last month launched THE Alliance, which aims to raise the berth utilization rate and lower transportation costs.

The company reported a net loss of NT$1.95 billion in the first quarter, a greater hit than the NT$901.5 million lost during the same period a year ago. It last year posted a net profit of NT$320.85 million, compared with a net loss of NT$14.91 billion in 2016.

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Source: Taipei Times

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