The container shipping industry in Asia is expected to return to break-even point from the second quarter, after posting a heavy loss in the first quarter, a foreign brokerage house said in its latest report. However, it could be more difficult to raise freight rates in the near future, UBS Investment Research said.
“Earnings recovery from the second quarter could still support [the industry’s] sentiment,” Richard Wei (魏強), an analyst at UBS Investment Research, said in a report issued on Wednesday.
The recent rising spot freight rates and growth in the US container import demand may be major factors leading the sector’s recovery, Wei said.
However, the brokerage house said the strong spot rate rebound is likely to end in the near future, as the growth in freight rates has been below expectations.
The Asia-Europe (AE) forward rate last week dropped below US$1,800 for a 20 foot-equivalent unit (TEU), its lowest level since February, the report said, citing Shanghai Shipping Exchange data.
Compared with demand from Europe, inbound trade on the west coast of the US grew faster, which may offer some support to trans-pacific rates, UBS said.
The stronger growth in US container import demand has seen global container shipping firms redistribute their shipping.
Evergreen Marine Corp (長榮海運), Taiwan’s largest container shipping firm in terms of fleet scale, said on Thursday that it would launch a new all-water service to the US with Mitsui OSK Lines Ltd, one of the biggest container shippers in Japan.
The service, linking major Asian ports to key destinations on the US east coast via the Suez Canal, would begin next month, Evergreen said in a statement.
The Green Alliance, formerly known as the CKYH alliance, also announced on Thursday that it would restructure five loops between Asia and the east coast of the US run by its members as of this month.
The move would enhance its comprehensive service network between Asia and the US by providing more competitive sailing frequencies, shortened transit times and enlarged service coverage, the alliance said in a note.
The alliance, formed in March 2002, is made up of Taiwan’s Yang Ming Marine Transport Corp (陽明海運), China’s China Ocean Shipping (Group) Co (中遠集團), Japan’s Kawasaki Kisen Kaisha Ltd — known as the “K” Line — and Hanjin Shipping Co of South Korea.
Taiwan’s three major container shipping firms — Evergreen, Yang Ming and Wan Hai Lines Ltd (萬海航運) — all posted quarterly losses in the first quarter on continuous weak freight rates and low demand.
The trio’s losses amounted to NT$0.94, NT$1.91 and NT$0.17 per share respectively during the January-to-March period, the companies’ financial data showed.