Evergreen Marine Corp, gave a conservative profit growth outlook for this quarter, as demand and freight rates retreated amid a strong US dollar and surging inflation, but its full-year profit could exceed that of last year, president Eric Hsieh told an investors’ conference in Taipei yesterday.
The shipper’s third-quarter revenue grew 19 percent to NT$169 billion (US$5.3 billion), slower than an annual expansion of 75 percent in the second quarter and 91 percent in the first quarter, company data showed.
“The third quarter is historically a peak season for shipping, but freight demand last month plunged due to surging inflation. We do not expect a quick rebound this quarter, unless the inflation issue is resolved,” Hsieh said.
Nonetheless, Evergreen should be able to stay in the black this quarter, with profit this quarter possibly surpassing that of the same period last year, he added.
With the Shanghai Containerized Freight Index, which reflects spot freight rates on major routes, further declining this week to 1,814 yesterday, Hsieh said that Evergreen is facing pressure from some clients to reduce rates.
Clients, especially those from American and European markets, have asked that the gap between their contract rates and spot rates be reduced, and Evergreen has discussed the issue with them on a case-by-case basis, he said.
Most clients in Asian markets are sticking to their contracts, he added.
Average shipping rates slid to US$2,529 per twenty-foot-equivalent unit last month, falling for the second straight month from US$2,978 in July, compared with a peak of US$3,222 in February, company data showed.
The improvement in congestion at seaports worldwide might have helped lower shipping rates, and the average punctuality rate has recovered to about 45 percent — albeit still far below the pre-COVID-19 level of 70 percent, he said.
Evergreen is conservative, but not pessimistic about next year, Hsieh said, adding that he does expect a net loss next year.
Demand for shipping would be affected by inflation and Russia’s invasion of Ukraine, but global economic growth is forecast to remain in positive territory, Hsieh said.
Even though global shipping capacity would rise next year as shippers receive new vessels, growth would be limited by the implementation of new environmental regulations, or the Carbon Intensity Indicator, Hsieh said.
Source: Taipei Times
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