Evergreen plans to upgrade fleet

INCREASE CAPACITY::The container shipping company’s plans to upgrade fleet capacity reflects the trend to operate larger container vessels to save unit costs

By Amy Su  /  Staff reporter

Mon, Jan 06, 2014 - Page 14

Evergreen Marine Corp (長榮海運), the nation’s largest container shipping company, plans to charter seven new vessels with capacity of 14,000 twenty-foot equivalent units (TEU) to upgrade its fleet at lower unit costs.

However, the upgrade plan might not have a significant impact on the container shipper’s capacity, as the company is to gradually retire some of its old and smaller vessels with lower operating efficiency.

The seven vessels — owned by Sumitomo Corp, a leading integrated trading company in Japan — are scheduled to be delivered to Evergreen in 2016 and 2017, with a 10-year term of tenancy.

“The decision fits into the company’s fleet replacement plan,” Evergreen Marine said in an announcement on the Taiwan Stock Exchange (TWSE).

With the world’s three-largest container shippers announcing plans to introduce a set of vessels with capacity above 10,000 TEUs, the trend to operate larger container ships to save unit costs has been confirmed.

Evergreen launched a plan last year to introduce more large vessels.

The company announced last year it will charter 10 container ships with capacity of 13,800 TEUs — built by Hyundai Heavy Industries — from Greek shipowner Enesel SA.

The container shipper has taken delivery of two of the 10 vessels since September last year, with the remaining eight to be delivered in the second half of the year.

However, Evergreen Marine said the plan would not increase supply in the container shipping industry significantly, as the company intends to replace some of its smaller vessels during the period by eliminating its self-owned ships or not extending the leasing contract of its chartered vessels.

Evergreen Group (長榮集團) vice chairman Bronson Hsieh (謝志堅) said last month that demand for this year on container shipping sector could rise on the back of global economic recovery. Evergreen Marine has also announced to implement a rate restoration program for routes from Far East and Indian Sub-Continent to Europe and the Mediterranean region by US$500 per TEU, or by US$1,000 per forty-foot equivalent unit (FEU).

The rate-hike plan, effective on Wednesday, reflects the company’s brighter outlook for this year. Hsieh said the company is considering joining the Green Alliance, also known as the CKYH alliance, to improve its competitiveness.

The Green Alliance comprises a group of several Asian container shipping companies, including Taiwan’s Yang Ming Marine Transport Corp (陽明海運), China Ocean Shipping (Group) Co (中遠集團) of China, Japan’s Kawasaki Kisen Kaisha Ltd — known as “K” Line — and Hanjin Shipping Co of South Korea. In the first three quarters of last year, Evergreen Marine posted a net loss of NT$2.19 billion (US$72.91 million), or NT$0.63 per share, its financial statement showed.

However, the container shipper might still post a profit for the whole of last year, thanks to its strong non-operating gains. Last month, the company announced that its full-owned subsidiary, Greencompass Marine SA (青標海運), disposed of containers worth NT$2.24 billion, which may lead the company to earn a total of NT$44.8 million, its stock exchange data showed.