Yang Ming Marine Transport Corp gave an optimistic outlook for the first half of this year on expectations that container shipping rates would remain high, reports TaipeiTimes.
High freight rates
Yang Ming president Patrick Tu told an investors’ conference in Taipei that a combination of a shortage of empty containers and traffic congestion at ports worldwide due to the COVID-19 pandemic is expected to keep freight rates high until the end of June.
Yang Ming is Taiwan’s second-largest container shipper by fleet size.
New long-term contracts
It has negotiated new annual long-term contracts for its routes from Asia to the US with some of its clients, Tu said, adding that contract rates and capacity ordered by clients rose from a year earlier.
Yang Ming’s operations from Asia to the US made up 42 percent of its total revenue last year, followed by its operations in Europe with 32 percent and Asia with 26 percent, company data showed.
Industry’s oversupply issue
The shipping industry has had an oversupply problem over the past few years, but the issue would be resolved this year, Tu said, citing forecasts by maritime research firms such as London-based Drewry Shipping Consultants Ltd and Clarkson PLC.
Drewry’s forecast
Drewry has forecast that supply for container capacity would grow 4.5 percent this year and demand would rise 8.9 percent, while Clarkson projected a 3.8 percent gain in supply and 5.4 percent rise in demand, Tu said.
Sustainability of profit momentum
Whether Yang Ming would sustain its profit momentum in the second half of this year is still unclear, as it would depend on the pandemic and fuel costs, Tu said.
Overall, Yang Ming is optimistic about turning a profit, he said.
Average freight rate
The company yesterday reported an average freight rate of US$1,140 per twenty-foot-equivalent unit (TEU) at the end of last year, up 50 percent from US$759 a year earlier, while its average fuel cost dropped 31 percent annually to US$321 per tonne.
Suez Canal block
Tu said two Yang Ming vessels have turned south to sail around the Cape of Good Hope due to the Suez Canal being blocked.
Although the change in course would add seven to 10 days to the shipping time, Yang Ming would not need to compensate its clients according to global maritime law, he said.
Yang Ming shares rose 3.68 percent to NT$35.25 in Taipei trading yesterday.
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Source: TaipeiTimes
