Wan Hai Lines Ltd (萬海航運) yesterday said it expects sea cargo rates to improve in the second and third quarters from the first quarter, and that rates for long-term contracts would be better than spot rates.
The decline in freight rates has slowed since the Lunar New Year holiday and the rates for some Asian markets have even started to rebound, Wan Hai president Tommy Hsieh (謝福隆) told an investors’ conference.
The shipper expects the US market to return to pre-COVID-19 pandemic levels this year. Demand in the US market would start to pick up in the third quarter, as most clients are still digesting inventories, Hsieh said.
Photo: CNA
To boost demand during the slow season, the container shipper is offering customized services to attract clients, he said.
“The outlook for the North American market would be clearer later this month after we finish negotiating with some of our large retail clients and sign contracts,” he said.
Despite the downtrend, Wan Hai expects rates of newly signed long-term contracts to be higher than spot rates, as clients would be willing to pay more to secure capacity and ensure stable transportation, he said.
The company’s plans to use its larger vessels for its operations on the east and west coasts of the US, while its medium-sized or small vessels would be deployed in the Asian and Middle Eastern markets, the company said.
Wan Hai yesterday reported its freight rates for four markets — the US, South America, Middle East and India — as well as intra-Asian markets in the fourth quarter last year.
FREIGHT RATES
The rates for the US and South America both fell below US$2,000 per twenty-foot equivalent unit (TEU), compared with their peak of above US$6,000 in the first quarter last year and the fourth quarter of 2021 respectively, corporate data showed.
Meanwhile, the rates for the Middle East and India slid from a peak of about US$3,000 per TEU in the fourth quarter of 2021 to about US$1,000 per TEU in the fourth quarter last year, while intra-Asian rates remained comparatively low, the data showed.
Responding to an investor’s question on whether Wan Hai could report net quarterly losses this year following its net loss of NT$40 million (US$1.31 million) in the fourth quarter of last year, Hsieh said that the company would not provide forecasts.
Asked about the company’s plan to distribute a low cash dividend of NT$5 after posting earnings per share of NT$33, Hsieh said that the company plans to buy new vessels to boost its fuel efficiency and reduce its average fleet age.
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