In Trends

Evergreen expects a rebound in the third quarter

Evergreen Marine Corp

Evergreen Marine Corp, a Taiwanese container transportation and shipping company, said it expects a rebound in its cargo volume in the third quarter after facing up to 20 percent plunge in the first half of the year due to the COVID-19 pandemic.

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However, as uncertainties remain in the fourth quarter, the company’s annual cargo volume might fall 15 percent year-on-year for the whole of this year, the nation’s largest cargo shipper said.

While the pandemic has decelerated economic activity worldwide and weakened demand in the global container shipping market, Evergreen saw demand pick up earlier this month and has received more orders for next month and August, company chairman Anchor Chang told a news briefing in Taipei.

Summer is traditionally the cargo shipping industry’s peak season, as many suppliers transport their goods for clients ahead of product launches.

“The cargo volume in the third quarter is likely to be flat from last year, but it would be a decent performance considering the effects of the pandemic. It is difficult to see annual growth in volume this year, as global trade declines and consumption slows due to lockdown measures,” Chang said.

The world’s three major container shipping alliances — the Alliance, 2M Alliance and Ocean Alliance — have reduced their capacity amid the outbreak to address oversupply in the industry, which helps shippers maintain load factors and curb declines in freight rates, Evergreen executive vice president Patrick Wei said.

A reduction in capacity would have a mixed effect on shippers’ financial performance, as it would lead to a drop in revenue while saving their operational costs, such as fuel and labor costs, Wei said.

Most shippers in the past few months have performed maintenance on their idle vessels, while Evergreen has equipped its idle vessels with scrubbers to reduce emissions and meet new International Maritime Organization regulations, Wei said.

“It is questionable whether most shippers would continue trimming capacity in the fourth quarter when the cargo demand recovers, but if all shippers return to full capacity, the oversupply issue would emerge again,” he said.

For Evergreen, revenue generated from the Asia-Europe route and the Asia-US route accounts for 65 percent of its total revenue.

A second wave of COVID-19 in the West could complicate fourth-quarter visibility for cargo volume, he said.

The shipper has reported no infections among its crews, saying that it bars them from disembarking when arriving at any port and does not allow families aboard.

Evergreen also routinely takes its crews’ temperatures and orders them to self-isolate before boarding, it said.

The company added that it has extended contracts with crew members who could not return home due to border restrictions.

“This is a challenging year for shippers,” Chang said.

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Evergreen reported a net loss of US$14.89 million for the first quarter, after revenue fell 4.86 percent year-on-year to US$1.47 billion. Net loss per share was US$0.003 in the first quarter, compared with earnings per share of US$0.0041 a year earlier.

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