TAIPEI (Taiwan News) – Due to inflationary pressures, sluggish demand and plummeting freight rates, revenues of Taiwan’s three major container shipping companies fell 40-50% year-on-year in December.
Evergreen Marine announced that its consolidated revenue in December was NT$29.144 billion (approximately US$955 million), a decrease of 19.25% from the previous month and a decrease of 44.2% from the same period last year.
Yangming Shipping has also encountered similar troubles. In December, its revenue was NT$16.36 billion (US$955 million), a decrease of 16.58% month-on-month and a decrease of 53.4% compared to the same period last year. Wan Hai Lines fared equally poorly, with December revenue of NT$11.4 billion ($374 million), down 50.7 percent from a year earlier.
Evergreen pointed out in an article in the “China Times” that due to factors such as inflation, the Ukrainian-Russian War, and the ongoing new crown epidemic in China, freight rates have continued to be under pressure recently. All of these factors are affecting overall demand, the report said.
Shipping companies remain hopeful about the year ahead. At present, key freight rate indicators such as SCFI and CCFI have gradually stabilized. However, there are concerns that the slowing economy could have a delayed impact on freight rates, as the monthly decline in revenue in December points to a larger economic trend.
Yang Ming said that the rapid changes in supply and demand in the shipping market make it difficult to grasp the overall development in 2023. The current market situation shows that global inflationary pressures affect unfavorable factors such as consumer purchasing power. Geopolitical concerns such as wars in Russia and Ukraine, labor shortages disrupting supply chains and factories closing early for the holidays.
Yang Ming said that the implementation of environmental protection regulations may affect the speed and number of cargo ships, which is beneficial to the shipping market. This could lead to a reduction in transportation supply, temporarily balancing supply and demand.
Furthermore, Yang Ming hopes that if many countries achieve their economic development goals and targets, a subsequent period of explosive recovery can be foreseen.
Vessels over 400 gross tonnage will be subject to new existing environmental regulations requiring compliance with mandatory carbon emission reduction requirements set out in the Energy Efficiency Index for Existing Vessels (EEXI).
In fact, container shipping companies need to optimize route planning and operation strategies to achieve carbon emission reduction targets. This will be a daunting challenge given the unpredictability of large fluctuations in the supply and demand of shipping services.
On top of that, container companies also need to meet rising expectations for punctuality and quality of customer service.