Taiwanese Shippers Expect Improving Business Starting in September

After generally experiencing sluggish demand for container shipping services in the first half (H1) this year, Taiwanese shippers will likely see improving sales starting in September.

One positive sign of improving market is that the Transpacific Stabilization Agreement group composed of 15 global container lines has raised freightage by US$600 per FEU (forty-equivalent unit) for the Asia-U.S. route.

The Baltic Dry Index (BDI), an index issued daily by the London-based Baltic Exchange mainly to assess dry bulk rates, closed at 1,147 on August 29, sharply up 52.9% from 750 early in the month, while the Baltic's Capesize index also jumped to 2,627 from 1,150. Such increases further boost Taiwanese container lines' confidence to enjoy significantly improving performance starting in September.

Another factor to drive the industry is the upcoming high season for the global shipping market, particularly the segment for bulk cargo freight. One insider indicates that market demand for bulk cargo shipping will significantly surge soon partly on Chinese steelmakers who generally begin restocking raw materials as iron ore and coking coal before the end of a year, and partly on North America's crop exports to soar at year's end.

Anxious about slack market demand, Taiwan's Evergreen Marine Corp. and Yang Ming Marine Transport Corp. suffered net losses of NT$1.514 billion (US$50.46 million) and NT$1.303 billion (US$43.43 million) in H1, while Wan Hai Lines Ltd., was spared to score net profits of NT$1.756 billion (US$58.53 million). Compared to container lines, bulk cargo shippers on the island mostly stayed in fine shape to enjoy profits during the same period. (SC)