Yang Ming Marine Transport Corp (陽明海運) said that it plans to weather slowing international trade and a persistent capacity glut by expanding into alternative routes and businesses.
On March 14, Yang Ming announced plans to increase its presence in the Southeast Asian market via a partnership with Thailand’s Regional Container Lines Group.
The move came after the nation’s second-largest container shipper in terms of fleet size in December last year formed strategic alliances with China Airlines Ltd (中華航空) and Chunghwa Post (中華郵政) to tap into the logistics and electronic-commerce markets and to save on operating costs.
However, the supply glut in the sector has shown no signs of subsiding, the company said, adding that it expects freight prices to continue falling, in particular for routes to Europe.
"2016 still looks challenging as the excess capacity resulting from 2015 vessel deliveries will take time to be absorbed," JPMorgan Securities Ltd said in a client note on Monday.
Industry observers said major shippers have planned additional capacity rationalization on Asia-Europe routes in next three months. However, freight rates are not expected to rebound until the high season in the third quarter of this year, they said.
Despite the supply glut, Yang Ming said plans to add 14,000 twenty-foot-equivalent unit (TEU) vessels this year would remain unchanged.
The shipper said it seeks to take advantage of falling fuel prices and is targeting cost reductions through improved operating efficiency.
Last year, Yang Ming reported a net loss of NT$7.72 billion — or losses per share of NT$2.24, compared with net income of NT$411 million in 2014.
In comparision, Evergreen Marine Corp (長榮海運) reported a net loss of NT$4.41 billion for last year, or losses of NT$1.26 per share, while Wan Hai Lines Ltd (萬海航運) saw net income decline 24.95 percent to NT$3.93 billion, with earnings per share of NT$1.78.
Analysts attributed Wan Hai’s earnings to the company’s focus on operating freight routes within Asia, as opposed to longer hauls.
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