On Monday, Yang Ming Marine Transport reported that the early peak shipping season shows no signs of slowing, with initial volumes for the third quarter exceeding last year’s levels due to robust demand from US and European consumers.
Despite this, Taiwan’s second-largest ocean carrier remains cautious about the overall outlook for the second half of 2024.
“Entering the third quarter, customer demand is still higher than last year,” stated Peter Su Yu-Wen, Yang Ming’s CFO and senior vice president, during an investors’ webinar. “For July, we should be able to maintain the same situation as June.”
Yang Ming, ranked 10th globally in ocean capacity by Alphaliner with 94 ships totaling 707,000 TEUs, has experienced a steady increase in revenues. They rose 27% to $2.3 billion in the first five months of the year compared to the same period last year, following a 266% increase in net profit in the first quarter, reaching $290 million.
However, Su refrained from predicting whether the favorable conditions for carriers would persist into the fourth quarter or end earlier than usual due to the earlier start of the peak season.
“Although the third quarter is the traditional peak season, concerns about global geopolitical issues and regional conflicts remain,” he said. “What we are looking at is quite short-term because there are too many external factors that interfere with the market and create uncertainty. We really have to look at the situation month-by-month.”
Vessel Diversions Creating ‘Chaotic Situation’
Su noted that ongoing vessel diversions around the Cape of Good Hope in southern Africa, to avoid potential drone and missile attacks in the Red Sea, necessitate “two, three, or four extra vessels” to maintain service reliability on North Europe and Mediterranean routes. This has narrowed the gap between supply and demand, supporting freight rate increases.
Su added that while Drewry and Alphaliner estimate container ship capacity will grow by 10% this year before moderating to between 4.4% and 5% in 2025, the Red Sea diversions will reduce overall vessel supply by up to 20%.
The schedule disruptions caused by these diversions have led to a “chaotic situation” characterized by blank sailings, port congestion, and skipped vessel calls, especially in Southeast Asia.
