Freight forwarder and logistics operator T3EX Global Holdings Corp (台驊國際投資控股) saw its net profit advance 17.39 times from a year earlier to NT$398.17 million (US$14.25 million) last quarter, as air and sea cargo rates remained high.
Earnings per share (EPS) jumped to NT$3.16 last quarter, not only hitting the highest in a single quarter, but also surpassing cumulative EPS in the first three quarters of last year, it said yesterday.
“We suffered in the first quarter last year due to the COVID-19 pandemic and even had to ask some of our employees to take unpaid leave. However, the tide has turned this year,” T3EX chairman David Yen (顏益財) told an earnings conference.
Sea freight rates have surged from 2019, as consumption-driven demand recovered and container capacity declined, it said.
“Demand for container shipping capacity exceeded supply across all shipping routes, which is unprecedented over the past four decades,” Yen said.
The COVID-19 pandemic was not the only factor behind the shipping boom, it could also be attributed to changes in the industry’s structure, as many shippers retired older vessels in advance due to tighter environmental regulations, which helped reduce supply and improved cargo rates, Yen said.
“Major players have not raised their capacity significantly over the past few years and it might be the new normal, as they know that [massive capacity expansion] would be suicide,” Yen said.
T3EX said it expects sea freight rates to remain high this quarter, fueled by the US’ new economic relief bill and a recovering global economy, as vaccination rollout picks up speed.
Sea freight rates could decline once congestion problems at sea ports are solved, but that would not necessarily hurt them, as smoother marine traffic would mean shippers could increase freight volume, Yen said.
T3EX added that it expects air cargo rates to remain high this quarter, as many clients, such as computer, panel and sports equipment manufacturers, who used to transport their goods by sea have switched to air cargo service to avoid penalties for delays.
“Nowadays, air cargo rates change thrice a day as airlines, which rely on their cargo business to weather the crisis, focus on adjusting pricing to gain the most profit,” said Benison Hsu (許旭輝), chairman of Taiwan Express Co (台灣航空貨運), a unit of T3EX.
T3EX also reported that its book value of NT$3.86 billion at the end of last month was 23 percent higher from a quarter earlier, as its unrealized profits advanced due to the rising share price of Yang Ming Marine Transport Corp (陽明海運), in which it holds 17 million shares.
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