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Tuesday, October 15, 2019

Maritime Logistics Professional

March 25, 2019

Yang Ming Reports $219mln Loss for 2018

Pic: Yang Ming

Pic: Yang Ming

Taiwanese global shipping and logistics services company Yang Ming Marine Transportation Corp. it had a net loss of $218.5 million in 2018, with operating results significantly impacted by higher fuel prices.

According to a stock exchange annoucement from the ocean shipping company based in Keelung, its consolidated revenues of 2018 totaled NTD 141.83 billion (USD 4.70 billion), up 8.21 % compared with NTD 131.08 billion (USD 4.35 billion) in revenue from previous year.

Volumes in 2018 increased to 5,232 thousand TEUs, up 11% year over year, it said.

Yang Ming’s 2018 operating results have been significantly impacted by higher global bunker fuel prices, which increased by 31.17% compared with the previous year. Despite the 11% volume growth due to strategies implemented in 2018, Yang Ming’s operating margins were eroded by higher bunker costs. Based on market data collected by Alphaliner showing weak demand growth at 4.8% and an excess supply growth at 5.7% in 2018, freight rates struggled to rise to levels that could set off against the higher bunker costs.

Moving into 2019, unsettling geopolitical risk factors, including the ongoing U.S.-China trade war and Brexit, continue to impact bunker fuel prices and conditions in global trade.

In addition, the International Maritime Organization (IMO) 2020 Low Sulphur regulations, which are scheduled for implementation on 1st January 2020, will inevitably increase operating costs, as global carriers decide between installing scrubbers on vessels or using more costly low-sulfur fuel in order to be in compliance.

Based on the latest forecast from Alphaliner, the supply growth rate in 2019 is projected at 3.1% while the demand rate will grow at around 3.6%. Therefore, the trend in global shipping is moving towards a more balanced level of supply and demand.

Driven by the IMO 2020 Low Sulphur regulations, the world’s fleet may also see a greater number of older inefficient vessels scrapped in the near term, which would add complexity and challenges to the shipping market.

In light of the uncertainties surrounding global trade and the pressure on bunker prices, Yang Ming remains cautiously conservative on its outlook for 2019.