Evergreen Marine Corp (長榮海運) yesterday gave an upbeat outlook for next quarter and for the first half of next year on expectations that congestion at major sea ports would continue amid the COVID-19 pandemic, leading to an increase in freight rates.
“At the previous investors’ conference, we forecast that the port congestion would last until the third quarter, but now, it seems like the issue will not be resolved until the fourth quarter, or until the end of June next year,” Evergreen president Eric Hsieh (謝惠全) told an investors’ conference in Taipei.
Hsieh cited the persistent congestion at the port in Los Angeles as an example.
Photo provided by Evergreen Marine Corp
The port’s backlog of container ships was alleviated earlier, but has worsened again, with more than 30 vessels idling offshore at present, he said.
The congestion resulted from supply disruptions because of a pandemic-induced labor shortage, Hsieh said.
Rising demand for shipping containers driven by a global economic recovery is also part of the cause, he said.
“Our clients in the US and Europe have seen low inventories and need to keep importing goods for Thanksgiving promotion activities. Booking for our capacity has been strong. The momentum will not wane in one or two months,” Hsieh said.
As a result, next quarter would not follow the usual seasonal slowdown for shipping, he said.
Evergreen’s average freight rate surged 197 percent year-on-year to a seven-month high of US$2,366 per twenty-foot-equivalent unit (TEU) last month, it said.
Higher freight rates helped boost the shipper’s profits to NT$78 billion (US$2.78 billion) in the first half of this year, 28 times higher from a year earlier, company data showed.
Evergreen’s gross margin climbed to 53 percent in the first six months of the year, surpassing Taiwan Semiconductor Manufacturing Co’s (台積電) gross margin of 51 percent, Hsieh said.
Evergreen’s new Ever Ace (長範輪), a 24,000 TEU vessel, has started operations and its load factor is high, signaling strong market demand, he said.
The nation’s largest shipper in terms of fleet size said that it would take delivery of another four vessels with the same capacity as that of Ever Ace by the end of this year, which should help it gain more orders.
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