Reduced container supply caused by Red Sea rerouting should bolster freight rates and profitability for local shipping companies this year, but the successive delivery of mega container ships would cast a shadow over their prospects next year, Taiwan Ratings Corp (中華信評) said yesterday.
The local branch of S&P Global Ratings disclosed the findings in a report which examined the impact of ongoing Red Sea disruptions on Taiwan’s three leading container shipping companies.
Taiwanese container shippers including Evergreen Marine Corp (長榮海運), Yang Ming Marine Transport Corp (陽明海運) and Wan Hai Lines Ltd (萬海航運) have rerouted their container ships away from the trouble spot, along with the majority of their global peers.
Photo: CNA
“Rerouting by major container ship operators has reduced effective container supply on main-lane service lines and pushed up their freight rates,” Taiwan Ratings credit analyst Susan Chen (陳宛暄) said.
As a result, profitability for the three container carriers spiked in the first half of this year and would hold firm for the rest of the year, Chen said.
Evergreen Marine posted a net income of NT$46.84 billion (US$1.47 billion) in the first half of this year, swelling 362.1 percent from the same period last year, with earnings per share of NT$21.86, the company said last month.
Evergreen Marine attributed its earnings improvement to higher freight rates induced by rerouting to circumvent troubled waters.
Similarly, Yang Ming Marine reported a net income of NT$23.27 billion in the first half, rising 611 percent from a year earlier, with earnings per share of NT$6.66.
Yang Ming Marine said last week that it would continue to reroute in the first quarter of next year, suggesting higher freight rates would be sustained in the coming quarters.
Wan Hai Lines’ first-half profit soared to NT$16.19 billion, with earnings per share of NT$5.77. The earnings are a stark contrast to the losses of NT$4.4 billion for the same period last year.
The three shippers could post brighter financial performances in the second half of this year amid lingering geopolitical tensions and the advent of the high season for shipping services, analysts have said.
Taiwan Ratings agreed, but voiced reservations over the delivery of mega vessels which could tip the balance against main-lane service lines and see supply far exceed demand next year.
“Supply discipline among large players will be crucial to uphold freight rates as new vessel deliveries carry on,” Chen said.
A persistent imbalance between container ship supply and demand could undermine carriers’ profitability and cash-flow generation from next year, she said.
Still, the three Taiwanese shipping companies would maintain their strong capital structure over the next two years, helped by ample cash reserves and strong profits for the whole of this year, Chen said.
When an apartment comes up for rent in Germany’s big cities, hundreds of prospective tenants often queue down the street to view it, but the acute shortage of affordable housing is getting scant attention ahead of today’s snap general election. “Housing is one of the main problems for people, but nobody talks about it, nobody takes it seriously,” said Andreas Ibel, president of Build Europe, an association representing housing developers. Migration and the sluggish economy top the list of voters’ concerns, but analysts say housing policy fails to break through as returns on investment take time to register, making the
‘SILVER LINING’: Although the news caused TSMC to fall on the local market, an analyst said that as tariffs are not set to go into effect until April, there is still time for negotiations US President Donald Trump on Tuesday said that he would likely impose tariffs on semiconductor, automobile and pharmaceutical imports of about 25 percent, with an announcement coming as soon as April 2 in a move that would represent a dramatic widening of the US leader’s trade war. “I probably will tell you that on April 2, but it’ll be in the neighborhood of 25 percent,” Trump told reporters at his Mar-a-Lago club when asked about his plan for auto tariffs. Asked about similar levies on pharmaceutical drugs and semiconductors, the president said that “it’ll be 25 percent and higher, and it’ll
NOT TO WORRY: Some people are concerned funds might continue moving out of the country, but the central bank said financial account outflows are not unusual in Taiwan Taiwan’s outbound investments hit a new high last year due to investments made by contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and other major manufacturers to boost global expansion, the central bank said on Thursday. The net increase in outbound investments last year reached a record US$21.05 billion, while the net increase in outbound investments by Taiwanese residents reached a record US$31.98 billion, central bank data showed. Chen Fei-wen (陳斐紋), deputy director of the central bank’s Department of Economic Research, said the increase was largely due to TSMC’s efforts to expand production in the US and Japan. Investments by Vanguard International
WARNING SHOT: The US president has threatened to impose 25 percent tariffs on all imported vehicles, and similar or higher duties on pharmaceuticals and semiconductors US President Donald Trump on Wednesday suggested that a trade deal with China was “possible” — a key target in the US leader’s tariffs policy. The US in 2020 had already agreed to “a great trade deal with China” and a new deal was “possible,” Trump said. Trump said he expected Chinese President Xi Jinping (習近平) to visit the US, without giving a timeline for his trip. Trump also said that he was talking to China about TikTok, as the US seeks to broker a sale of the popular app owned by Chinese firm ByteDance Ltd (字節跳動). Trump last week said that he had
RSS