Controlling costs and adding services on routes with growing demand were behind the reasons to TS Lines’ 170% year-on-year increase in profits, according to the intra-Asia carrier’s chairman Chen Te-sheng.
The Taiwanese operator has reported profits of TW$650 million (US$21.49 million), achieved by responding to challenging conditions, caused by Covid-19, that the company withdrew from the US trades and concentrated on operating intra-Asian and Asia-Australia routes. Chen said the company further reduced costs by redelivering chartered vessels that were deployed on withdrawn services.
The leased fleet increased the flexibility of the company’s operations. While owning a certain percentage of newly-built own ships, with high fuel efficiency, allows the company to reduce costs further.
Chen said that there is a silver lining in the pandemic, as oil prices collapsed to an 18-year low, resulting in low-sulphur fuel oil becoming cheaper. This meant compliance with the International Maritime Organization’s emissions cap was more affordable.
“Oil prices fell sharply in March. As the fuel surcharge was calculated based on the oil price of the previous quarter, when our actual bunker costs fell, the company's profit increased,” explained Chen.
Cargoes to and from India and the Philippines declined, during the Q2, but TS Lines added services to Thailand and Vietnam, where cargo demand remained strong. Consequently, the carrier’s operating profit for Q2 2020 is forecast to be TW$700 million (US$23.63 million).
Chen said, “We’ll continue to acquire vessels and commission newbuildings. Three years ago, we aimed to own five vessels. At the time, we operated 36 vessels. Today, we’re operating 46 ships, including 12 owned vessels. Another three are under construction. Today’s newbuildings are fuel-efficient, but it takes two years for a vessel to be built. If there are suitable pre-owned ships in the market, we’ll consider second-hand purchases.”