Wisdom Marine Group (慧洋海運集團), the nation’s largest dry bulk shipping company by fleet size, is upbeat about growth this year as it renegotiates higher contract prices with customers amid a gradual recovery in the global market.
The company is looking to renegotiate contracts for 48 vessels, with each expected to be inked at prices about 20 percent higher than a year earlier, Wisdom Marine president Cheng Chun-sheng (鄭俊聲) said at an investors’ conference in Taipei on Tuesday.
Higher contract prices are made possible by a rebound in the global dry bulk shipping market that began in the second half of last year, Cheng said, adding that the Baltic Dry Index — which tracks the costs of transporting dry commodities, such as coal, iron ore and grain, on 20 shipping routes — has been holding above 1,000 points throughout the slow season over the Lunar New Year holiday.
Improved market conditions would also help the company to replace older and less profitable vessels that were put on hold last year, Cheng said.
The company’s unaudited pretax profits for the first quarter surged 437.96 percent to US$7.38 million, he said.
During the same period, aggregate sales rose 20.1 percent to US$100.93 million, while aggregate operating profits rose 120.1 percent to US$23.79 million.
The company would dispose of between five and 10 vessels that are more than 15 years old and that are not equipped with ballast water treatment systems, which are required to meet environmental standards, Cheng said.
More stringent environmental regulations around the globe would continue to help ease a supply glut in the sector as more older and high-emission vessels are scrapped, he said.
However, the company is also facing challenges from tougher environmental regulations, as its vessels might be required to to use cleaner fuel worldwide, as opposed to only using cleaner fuel when entering ports with tougher controls in Europe and North America, he said.
Cheng downplayed the effects of a possible US-China trade war, and said that dry bulk shippers are nimble and quick to adapt to political shocks.
Most of the tariff hikes imposed by both sides are on end products, while dry bulk shippers mainly transport raw materials, such as iron sand, he said.
That could benefit dry bulk shippers, as there should be a larger demand for raw materials in the US when it implements its plans to boost manufacturing, Cheng said.
China needs to import food and the US needs to import raw materials, and dry bulk shippers are ready to accommodate any changes to trade partnerships by adapting their routes, Cheng said.
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