Local container shippers may face heavy pressure to boost their profitability next quarter as freight rates are expected to fall back after the peak season ends this quarter, analysts said.
The Transpacific Stabilization Agreement (TSA) has proposed a monthly rate hike of across-the-board general rate increase (GRI) by at least US$600 per forty-foot equivalent unit (FEU) to all destinations from Sept. 1.
TSA is a research and discussion forum of major container shipping lines serving the transpacific trade in both directions between Asia and the US.
Evergreen Marine Corp (長榮海運) as well as Yang Ming Marine Transport Corp (陽明海運), the nation’s two largest container shippers, are members of TSA and used TSA’s price proposals as a benchmark.
“Liners gave back part of rate hikes starting from Sept. 1, which [might] make more price hikes on the Trans-Pacific routes,” Corrine Png (方華婷), an analyst at JPMorgan Securities LLC, said in a report.
In a report released on Friday, Capital Securities Corp (群益證券) said labor disputes at the west coast harbors of the US helped stabilize leading freight rates of routes to the east coast and may pave the way for further price hikes this quarter.
“It’s more likely for freight rates to pull back in the fourth quarter,” the brokerage house said.
The Shanghai Containerized Freight Index fell 5.71 percent on Sept. 12 from a week earlier, also supporting the view that freight rates may have peaked, meaning that container shippers would face difficulty in maintaining profitability in the last quarter, the report said.
In the first half of this year, Wan Hai Lines Ltd (萬海航運) was the only listed container shipping company in the nation that posted a net profit on the back of its focus on regional routes in Asia, which showed a relatively steady growth in trade volume.
Wan Hai, the third-largest container shipping company in terms of fleet size, posted a net profit of NT$1.73 billion (US$57.17 million) for the first six months.
Capital Securities said the rebound in both freight rates and trade volume around the global, especially for shorter intra-regional routes, may help Wan Hai strengthen profitability this quarter.
Evergreen Marine Corp (長榮海運) and Yang Ming Marine Transport Corp (陽明海運), the nation’s two largest container shipping companies, reported losses of NT$1.54 billion and NT$1.34 billion respectively, for the January-to-June period.
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