Yang Ming Marine Transport Corporation (Yang Ming) held its 333th Board Meeting on August 10th, 2018 to approve its first half 2018 financial report.
The Q2 consolidated revenues total NTD33.6 billion (USD1.14 billion), up 1.12% from the same period in the previous year. The business volume of 1.29 million TEUs rose 11.84% year-on-year. Net loss for Q2 was NTD3.81 billion (USD 129.1 million).
In the meantime, for the first half of 2018, Yang Ming’s consolidated revenues totaled NTD64.6 billion (USD2.19 billion), up 1.81% compared with the same period in the previous year. The first half 2018 business volume totaled 2.52 million TEUs, climbing 10.28% from the same period in the previous year. The net loss for the first half 2018 was NTD 5.76 billion (USD 195.1 million).
Unexpected higher fuel prices drove up operating costs in the first half of 2018. Compared with the same period last year, the average fuel price in the first half year increased about 25%. Additionally, the shipping industry still shows an oversupply in tonnage, and faces arduous and continued challenges this year. Alphaliner recently forecasted the supply at 5.9% and demand at 4.6% in 2018. Average freight rates in the first half year were about 10% lower compared with the same period last year. Circumstances surrounding the global trade economy also present challenges and difficulties for the shipping industry. However, since demand is expected to grow at 4.2% and with supply growth predicted at 3.7% in 2019, the economic forecast will be more optimistic, with the shipping industry to benefit.
Yang Ming continues its efforts to lower costs and increase revenue. Yang Ming vessels are taking advantage of slow steaming to reduce bunker consumption and harmful emissions. Also, Yang Ming will be redelivering 7 high-cost chartered vessels starting in the fourth quarter this year. Our commercial strategy also utilizes marginal contribution data for cargo bookings in an effort to increase revenue. Second half performance is expected to improve due to stronger peak season demand and less new tonnage being introduced to the market. With these circumstances, ocean freight rates may rise as a result. Meanwhile, the demand/supply ratio is predicted to stabilize in the near future with service rationalization plans from the major alliances, and we anticipate seeing an immediate improvement to our operating performance as a result.
Planning for the future, Yang Ming has approved the construction of ten 2,800 TEU containerships, equipped with advanced eco-friendly equipment which will comply with environmental regulations. These vessels will be deployed in the Intra-Asia market. In addition, there are five 14,000 TEU chartered vessels scheduled for delivery beginning in the fourth quarter of 2018 and accompany with ten 12,000 TEU chartered vessels will be delivered in 2020 & 2021. These vessels will help optimize our fleet in the anticipated improving market. The number of Yang Ming’s 10,000-plus TEU class vessels will increase to 30. These Neo-Panamax containerships will update our fleet and help to provide efficiency, energy savings, and lowered unit costs. Yang Ming will continue to strengthen its business strategies and optimize fleet deployment to deliver better service networks. With an improving supply/demand and a recovering shipping market in 2019, Yang Ming anticipates better operating performance and results in the near term.