It is reported that Evergreen Marine Transport held a legal person briefing on the 14th. The company's general manager Xie Huiquan said that the peak season of the shipping market in the second half of the year was not prosperous in the third quarter. In the fourth quarter, due to the imbalance of supply and demand, revenue will decline again, but overall profits this year still have a chance to hit a new high.
Xie Huiquan pointed out that the key to the good or bad of the maritime market in 2023 is still the supply and demand relationship. With the new regulations on the Carbon Strength Index (CII) of the Ship is about to be implemented, old ships will be forced to slow down their navigation speeds and are expected to absorb 10% of their capacity. Therefore, Evergreen has a conservative but not pessimistic view of the 2023 maritime market.
Xie Huiquan said at the Fastening Conference that the overall revenue of the shipping market in the first half of this year was very impressive, and it can be said that it was the best performance in history. However, affected by the strong appreciation of the US dollar, high inflation and the conflict between Russia and Ukraine, the traditional peak season that should have in the third quarter performed mediocrely, with a peak season not booming, and revenue also declined compared with the previous two quarters. Evergreen's consolidated revenue in the third quarter was NT$170.4 billion NT$2 (approximately US$5.35 billion), a quarterly decrease of 2.61%.
Xie Huiquan believes that revenue will fall again in the fourth quarter due to the imbalance of supply and demand. Although the performance in the second half of the year is not as expected, it will still have good results throughout the year, even better than last year, and profits and revenue will hit a peak.
Speaking of the situation in the shipping market, Xie Huiquan believes that the insufficient supply of dock workers and port congestion caused by the epidemic has created high profits in the shipping market. However, as the epidemic began to improve, the congestion problem in most ports has been alleviated, and the most obvious improvement is Los Angeles Port . However, due to the transfer of freight volume from the United States and West to Gulf of Mexico and the East Coast, ports in these two regions are still facing congestion, but the congestion is not as serious as before. The port of Hamburg in Europe and the port of Felixtto in Europe were also stuck in congestion due to strike issues, while the situation in the docks in Asia was relatively good.
Source: Pexels
Regarding whether port congestion can be completely restored to normal in the future, Xie Huiquan said that it still depends on the shipping company's accurate shift rate . In the past, when the port was congested severely, the quasi-ship rate was only around 30%, but now it is around 45%, and the congestion in the port has eased. However, if is to completely solve port congestion and make port operation smooth, the accurate shift rate must reach more than 70%.
Due to changes in the shipping market, freight rates continue to fall. Xie Huiquan pointed out that most customers of the U.S. 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, they need to be discussed separately. As for the European line part of , long-term customers have requested to revise the freight rate due to the decrease in orders and the continuous decline in market prices. The proportion of customers with a length of about near the ocean line is more than 20%. The customers abide by the spirit of the contract and do not require the modification of the freight. Only a few customers require the price to be changed again in order to take into account the long-term cooperative relationship.
Looking forward to 2023, Xie Huiquan said that the development of shipping market still depends on the supply and demand situation. In terms of demand, it depends on the direction of the conflict between the US dollar, inflation and Russia-Ukraine. However, the global economy of is currently expected to maintain positive growth, and International Monetary Fund (IMF) estimates that GDP growth rate in 2023 will be 2.7%. In terms of supply, new ship delivery in 2023 will increase capacity by 8.2%, and the easing of port congestion can release 5-7% of the cabin supply.
However, with the implementation of the CII regulations in 2023, old ships will have to reduce their navigation speeds to reduce carbon emissions. According to the estimates of Baltic International Shipping Association (BIMCO), this may absorb 10% of the market's capacity, and the 8.2% capacity delivered by the new ship is not in place in one step, so the actual increase in supply is not as serious as everyone imagines. Therefore, overall, although the sea transportation market in 2023 is relatively conservative, it is not pessimistic.
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