Sat, Feb 08, 2014 - Page 13 News List

Container shipping sector looks forward to global business improving this year

By Amy Su  /  Staff reporter

The nation’s container shipping sector is ready to embrace a year promising improving business thanks to a forecast global economic recovery this year, which may help boost demand and ease the oversupply hardships that the industry faced over the past few years, industry insiders said.

“The company’s business this year will be better than last year, especially after the middle of the year,” Yang Ming Marine Transport Corp (陽明海運) chairman Frank Lu (盧峰海) told reporters on the sidelines of a spring gathering of the National Association of Chinese Shipowners (輪船商業同業公會全國聯合會) on Thursday.

DEMAND

Lu said demand in the container shipping sector may rebound this year, as the business outlook of various clients in traditional industries — such as the textile, livestock, steel and solar energy sectors — showed an improvement from last year.

A strong demand may increase the likelihood of higher freight rates for major global container shippers later this year and offset an oversupply that has plagued the industry, Lu said.

The Transpacific Stabilization Agreement (TSA) announced last week that its member carriers are recommending a general rate increase guideline of US$300 per 40-foot equivalent unit (FEU) for lines between Asia and the US, effective from March 15, followed by an undetermined rate increase on May 1.

COOPERATION

Despite the hope that a rate-hiking plan would be successfully executed, Evergreen Group (長榮集團) vice chairman Bronson Hsieh (謝志堅) said cooperation between global major container shippers may be more important.

“If some container shippers choose to adopt price-cutting competition later this month on the impact of weak seasonal demand after the Lunar New Year holiday, a rate restoration plan in March will have limited effect on raising profitability,” Hsieh said.

NEW SUPPLY

However, Hsieh expects that a rising pace of new supply in the container shipping industry this year may be slower than expected.

Alphaliner, a research institute for the container shipping sector, has revised downward its growth forecast for new supply this year to 6.6 percent in its latest report released earlier this month, from 7.1 percent it estimated previously.

Taking Evergreen Marine Corp (長榮海運) as an example, Alphaliner said that although the nation’s largest container shipping company is to take delivery of 18 new vessels this year, the company plans to stop chartering nine old-style vessels with lower energy efficiency — an indication that overall supply in the sector may be lower.

SENTIMENT

Sentiment in the bulk shipping sector, which mainly carries iron ore, coal, grain and cement products, has dropped significantly recently, with shippers’ capability to keep some contracts at higher prices deemed to be more important.

Wisdom Marine Group (慧洋海運集團), one of the nation’s major bulk shippers, said its profit fell by more than 60 percent year-on-year last month, reflecting the sluggish sentiment in the sector.

Pre-tax profit reached NT$83.42 million (US$2.77 million) last month, down 66.22 percent from a year earlier, the company said in a statement, adding that pre-tax earnings per share were NT$0.18 last month.

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