Evergreen Marine Corp (長榮海運) yesterday said that although the first quarter was bad, it remained “cautious, but not pessimistic” about this year, expecting inventory digestion to help improve its cargo shipping business in the second half.
Revenue at the nation’s largest container shipper fell 61 percent annually to NT$66.8 billion (US$2.19 billion) in the first quarter after shipping rates plunged 66 percent year-on-year to US$1,031 per twenty-foot equivalent unit (TEU) from US$3,060 per TEU, company data showed.
Freight volume in the first quarter did not plunge as much, with Evergreen Marine reporting 1.84 million TEUs, down 2.6 percent from 1.89 million TEUs a year earlier.
Photo courtesy of Evergreen Marine Corp
“Overall, global players all saw their income contract by 60 percent year-on-year in the first quarter, as shipping rates fell due to inflation and high inventory,” Evergreen Marine president Eric Hsieh (謝惠全) told an investors’ conference in Taipei.
However, Evergreen Marine is not pessimistic, as the first quarter is usually the slowest of the year, Hsieh said, adding that its revenue in the first quarter was still higher than in 2018 and 2019 before the COVID-19 pandemic.
Evergreen expects shipping rates and demand to begin rebounding at the end of June, as downside factors such as inflation, interest rate hikes and inventory woes should soften, Hsieh added.
Business should recover from the third quarter, he said.
“During the past few quarters, we witnessed containers being used as warehouses due to high inventory, but recently the turnover of containers has accelerated, indicating that inventory digestion was smooth,” he said.
As prices for fuel have calmed, manufacturing in Europe should recover, as it would in China after it ended pandemic lockdowns, Hsieh said.
“However, as many suppliers have moved production from China to Southeast Asia since the COVID-19 pandemic began, we have also observed that imports from Southeast Asia to the US are increasing, while those from China are decreasing,” he said.
Given that shipping rates are comparatively low, the shipper would not rush to sign new long-term contracts, he added.
On the other hand, tighter environmental requirements on vessels should also curb capacity, a trend that would help to solidify shipping rates, he said.
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