Yang Ming Marine Transport Corp gave a rosy outlook for the first half of this year on expectations that container shipping rates would remain high.
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 president Patrick Tu told an investors’ conference in Taipei.
Yang Ming is Taiwan’s second-largest container shipper by fleet size.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.
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 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.
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.
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.
Asked if the Suez Canal being blocked by the MV Ever Given container ship has affected Yang Ming’s operations, Tu said two Yang Ming vessels have turned south to sail around the Cape of Good Hope.
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.
Source: Taipei Times