Senior executives at Yang Ming Marine Transport held a media briefing to say that while the upcoming Chinese New Year has boosted fleet utilisation to nearly 100%, the outlook for early 2023 remains uncertain and shippers have sought to reduce contracted rates for long-haul lanes.
The Taiwanese liner operator’s chief financial officer Peter Su and chief commercial officer Frank Chang said that as of now, Yang Ming has no idle ships and they are optimistic that US and European retailers will start restocking inventories in mid-2023.
Su said, “In 2022, the market has been affected by inflation, high retail inventory, excess shipping capacity, rising interest rates, sluggish economic growth and other factors, resulting in relatively weak cargo demand, and freight rates continued to consolidate at low levels. Whether the imbalance between supply and demand will converge next year remains to be seen.”
Su noted that Yang Ming’s overall cargo volumes increased by about 4% in 2022, compared with 2021 levels, but each route has its own growth and decline. Intra-Asia lanes showed greater growth and cargo volumes increased by nearly 20%.
Chang pointed out that an early Chinese New Year, which falls on 23 January 2023, has provided some relief, but in response to journalists’ questions, sidestepped concerns that Yang Ming could be in the red in the first half of 2023, saying that the company does not make financial forecasts.
Chang admitted that while vessel utilisation was lower year-on-year in October and November 2022, Yang Ming’s ships are now fully loaded, thanks to exporters rushing to get their goods out before Chinese New Year.
Transpacific cargoes contribute half of Yang Ming’s turnover, while Asia-Europe cargoes account for just over 20%.
Chang said, “Some customers with long-term contracts have requested revisions. We’ll consider the correction in spot rates and how the contracts have performed.
“Currently, the fall in freight rates have shown signs of stopping, and there is a chance to see a slight rebound this month, but the timing and magnitude of the rebound are unpredictable. We have to wait until after the Chinese New Year, when factories in China reopen.”
He continued, “There’re many uncertainties in the first half of next year, and we can only battle on, while having expectations for the second half of the year. We think that US and European retail inventories will be drawn down in the next one to two months. As the weather gets warmer, energy prices will ease, and the impact of inflation and high interest rates is expected to be reduced. Orders from European and US shippers will gradually resume.”