Recently, shipping companies have released their performance reports for the first three quarters. Judging from the overall performance, shipping companies' overall performance in the first three quarters is still growing, but due to the continued decline in freight rates, the performance in the third quarter has a downward trend, and may perform mediocrely.
Recently, Evergreen Shipping Taiwan held a performance briefing. Faced with the continuous decline in freight rates, Xie Huiquan, general manager of Evergreen Shipping , said that the quality of the global shipping market should still be based on the supply and demand situation of the market. Given the high freight rates in the first half of the year, Evergreen Shipping's overall performance this year is still expected to be better than last year. Looking forward to next year, although the view is conservative, it is not pessimistic.
In addition to Evergreen Shipping, the other two major shipping companies in Taiwan, 0,000 Hai Shipping and Yangming Shipping have also announced their first three quarters' performance, and continued to grow in the first three quarters, but faced growth pressure in the fourth quarter.
At this time, Taiwan announced the lifting of crew shift restrictions, which allowed Taiwan shipping companies to seize the life-saving straw. On the one hand, it saved a large amount of crew change fees; on the other hand, it began to enable more crew members with lower costs, such as Vietnam, Myanmar, Philippines , etc. crew members.
It is reported that the decline of the SCFI container freight index has not stopped since the price resumed last week. The index fell by 108.95 points, falling to 1,814 points, a weekly decline of 5.6%, and has been declining for 17 consecutive weeks.
Among them, Far East -US and West came to US$2097 per FEU, down US$302 from the previous week, a drop of 12.5%; Far East to the US$5816 per FIU from the previous week, a drop of 343 from the previous week, a drop of 5.5%.
Source: Evergreen Shipping
For the first half of this year, it can be called the best half year in history. Major shipping companies delivered impressive enough performance results in the first half of this year.
In the second half of this year, despite the impact of the strong appreciation of the US dollar, high inflation and the conflict between Russia and Ukraine, Evergreen said that the traditional peak season in the third quarter was mediocre and the revenue also declined compared with the previous two quarters. In the fourth quarter, due to the imbalance of supply and demand, revenue may fall again. Although the performance of in the third and fourth quarters was not as expected, it was still expected to have good results throughout the year, and Evergreen will even be better than last year.
Regarding the outlook for next year's shipping market, Xie Huiquan pointed out that the market is too worried about the increase in the number of cabins next year, and the increase is not as much as everyone imagined.
General Manager of Evergreen Xie Huiquan
Xie Huiquan said that the quality of the shipping market still depends on the supply and demand situation, and the demand side depends on the evolution of the conflict between the US dollar, inflation and Russia-Ukraine. However, the global economy is currently expected to maintain its positive growth. The supply part is growing by 8.2% due to the delivery of new ships. The Serbian Port can release 5%-7% of the cabins. However, next year, the implementation of CII is due to the reduction of CO2 emissions. According to the estimates of the Baltic International Shipping Association (BIMCO), 10% of the cabin space may be absorbed, not to mention that 8.2% of the new ship delivery is not in place in one step. Therefore, the increase in actual supply is not as serious as everyone imagines. We have a relatively conservative view of the market next year, but it is not pessimistic.
In addition, Xie Huiquan also pointed out that most of the American line long-term customers require a reduction in the price difference with the spot market, but according to the different freight rates and service needs of each company, individual cases are discussed separately; some long-term customers in the European line have revised their freight rates due to the decrease in orders and the continuous decline in market prices; the ratio of long-term customers near the ocean line is more than 20%. At present, most customers also abide by the spirit of the contract and have no action to require freight corrections. Only a few companies make freight corrections to take into account the long-term cooperation relationship.
Multiple regions have lifted crew shift restrictions
Shipping companies have more seafarers in Southeast Asia and reduced costs
Hotel starting from October 13, Taiwan has lifted crew shift restrictions. At the same time, many countries in Europe and Southeast Asia have also lifted or relaxed entry restrictions, giving crew members more choices to change shifts.
Starting from the 13th of this month, crew members of all countries can come to Taiwan to change shifts. Just collect the fast screening agent from the disease control department, perform fast screening according to regulations, and start 7-day self-management.
Many Taiwanese shipping companies have stated that unblocking can indeed save shipping companies a lot of the cost of crew changing shifts. The salary of mainland crew members, which had previously risen due to the epidemic, was finally reduced after shipping companies switched to crew members from Vietnam, the Philippines, Myanmar and other countries this year, which will help alleviate the decline in the second half of the year.
Shipping Company also stated that the ships owned by Taiwan Shipping Company estimated that about 70 to 80% of the ships employed by mainland China. During the epidemic, because many countries had too few air passenger flights and were even completely grounded, the crew could not get out. Because most merchant ships docked at mainland China's ports, they raised the proportion of mainland ship employed. As a result, the salary of mainland crew members increased steadily. Before the epidemic, the salary of captains was less than 7,000 US dollars, up to 11,000 to 12,000 US dollars. This year, with the unblocking of the epidemic, ship owners tried to re-hire crew members of other Southeast Asian countries, and the salary of crew members in mainland China has declined. Currently, the salary of mainland captains is between 9,000 and 9,500 US dollars. If it is a captain in Southeast Asian countries, it is about 8,000 US dollars.
It is understood that since most of the ships docked in mainland China, it is very convenient to replace crew members in mainland China. Since the ship navigation ports are not fixed, the bulk carrier company sometimes has to spend a lot of money to allow crew members to fly to Europe and Australia to change shifts, and the replacement cost multiple increases. Therefore, Taiwan’s lifting of crew shift restrictions can intuitively and effectively relieve the pressure on major companies.
Shipping companies have stated that in the near future, various countries/regions have eliminated or relaxed crew shift restrictions, and shipping companies have indeed saved the cost of changing staff to a large extent. In addition, the tension in crew supply will also ease, so that crew members can be hired at lower wages than before. To a large extent, hedged to the decline in market freight rates in the second half of the year.
Source: Maritime Service Network CNSS
