Yang Ming Marine Transport Corporation (Yang Ming) held its 348th Board Meeting on August 13th, 2020 to approve its half year financial report for 2020.
Benefiting from strong freight rates and relatively low fuel costs, Yang Ming reported an improving quarterly result in its container transport business, generating positive operating profit of USD 18.64 million in the second quarter despite the business volumes was down 15% due to the COVID-19 outbreak.
In spite of the significant progress in container transport sector, the spread of the pandemic had negatively impacted the dry bulk market, resulting in quarterly losses of USD 20.94 million for Yang Ming’s dry bulk business (primarily attributable to the recognition of impairment loss on dry bulk chartered-in vessels under IFRS). As a result, Yang Ming reported narrowed losses of USD 2.25 million for the second quarter of 2020. For the first half of the year, the company’s consolidated revenues was down by 12.03% compared with the same period in the previous year to USD 2.2 billion, an reduction in business volume of 9.86% to 2.38 million TEUs. The net loss for the first half year was USD 29.49 million, which includes the loss from its dry bulk business of USD 30.53 million.
Looking forward, with Western countries begin to lift social distancing measures and manufacturing productions resume operation, the transpacific freight rates have surged to the highest level in two decades. The rates on Asia-Europe routes have also shown an improvement compared to the same period last year. In order to seize the opportunity, Yang Ming continues its business strategies to increase cargo marginal contribution and expand its customer base. Meanwhile, the company aims to efficiently control its operating costs, such as optimizing container flows to minimize container repositioning cost, feeder/inland transport and fuel consumption reduction, anticipating better performance in container transport sector in the third quarter.
Moreover, Yang Ming has accelerated its fleet optimization plan by adding fourteen 11,000 TEU chartered vessels and ten 2,800 TEU self-owned newly built vessels starting 2020. These new vessels with higher engine efficiency will achieve the advantages of lowering fleet average age and fuel cost savings, and consequently enhance the company’s long-term competitiveness.
In terms of dry bulk business strategies, Yang Ming will redeliver chartered tonnage including three vessels by the second quarter of 2021 and the remaining four long-term chartered vessels during 2022~2025. Furthermore, with charter rates on the rise and the Baltic Dry Index (BDI) posting gains, the recovering market will significantly improve its dry bulk business’ performance after the third quarter.