LONDON: The nation’s leading container shippers last week reported weaker-than-expected earnings for the third quarter amid a sharp drop in freight rates and a continual decline in Asia-Europe trade volume.
For this quarter, major Taiwanese shippers could see their losses continue to widen, even though they are cutting capacity to cope with an industry slowdown, analysts said.
“Losses are expected to widen this quarter, as freight rates have remained under pressure, with major containerized freight indices in China continuing to see sequential declines to date,” Parash Jain, director of regional transport research at HSBC, said in a note on Monday.
Jain’s remarks came after Evergreen Marine Corp and Yang Ming Marine Transport Corp, the nation’s largest and second-largest container shippers in terms of fleet size respectively, last week posted their biggest losses per share in 14 quarters, NT$0.69 and NT$1.22 respectively.
In comparison, Wan Hai Lines Ltd, the nation’s third-largest container shipper, posted earnings per share of NT$0.48 for last quarter, as the company focuses on regional routes in Asia, which saw a lesser impact from slower volume growth and lower rates than Asia-Europe shipping lines.
“We attribute the outcome to the sharp drop in freight rates during the third quarter and the race to increase market share at the expense of profitability, particular in the case of Yang Ming, which took delivery of 10 new 14,000 TEU [twenty-foot equivalent unit] ships this year,” Jain said in the note.
This year, both Evergreen and Yang Ming are facing margin erosion amid mounting operating costs and their profit forecasts have been slashed, Jain said.
Evergreen’s annualized return on equity last quarter was minus-14 percent, 15.3 percent lower than last year, while the figure stood at minus-11.2 percent for Yang Ming, 16 percent lower than the previous year.
