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Asian lines record Q2 profits as cost-control pays dividends

Liner operators Evergreen Marine Corporation, Wan Hai Lines and Regional Container Lines (RCL) all reported profits for Q2 as blanked sailings and lower bunker costs mitigated the impact of reduced cargo volumes.

Evergreen recorded a net profit of TW$3.19 billion (US$108.28 million) and Wan Hai made a net profit of TW$1.68 billion (US$56.82 million).

The Covid-19 pandemic tested the liner industry’s ability to practise capacity discipline and route configurations.

Evergreen stated that its net profit, which came after losses in the previous two quarters, was mainly due to the large increase in the Transpacific freight rates and the drop in bunker prices.

In Q2, vessels sailing from East Asia to both the US West Coast and US East Coast were at full capacity, and freight rates increased weekly. In particular, the US East Coast route rose to US$3,303/FEU at the end of June. Freight for the US West Coast route reached US$2,692/FEU.

Evergreen said that with freight rates still heading northwards, the company’s net profit will be higher in the traditional peak season, in Q3.

Its compatriot, Wan Hai, saw its net profit surge by 140% from the year-ago. Like its peers, Wan Hai reduced its expenses by returning chartered ships and blanking sailings. As average oil prices were 30% lower year-on-year, the company increased its profits. Wan Hai saw opportunities with the shortage of capacity on the Transpacific route, prompting it to launch a solo service.

Thailand’s RCL saw net profits surge to THB215 million (US$6.97 million) in Q2, as cargo volumes fell 15% to 465,000TEU. Reduced capacity lent support to freight rates, and bunker costs were down 37% lower, which saw a substantial rise in the company’s net profit.

RCL said it had improved its income through “Special port calls and extra voyage arrangements where cargoes existed.” RCL is continuing with cost-control action “through better capacity optimisation, cargo operation arrangements and box management.”

Martina Li
Asia Correspondent

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