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Taiwan's Yang Ming Marine pessimistic about shipping demand

Shipping giant sees marginal gains during peak season but expects a dropoff in 4Q

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Yang Ming Marine Transport Co. ship (Ministry of Transportation and Communication photo)

Yang Ming Marine Transport Co. ship (Ministry of Transportation and Communication photo)

TAIPEI (Taiwan News) — Yang Ming Marine (2609.TW) laid out a number of factors that continue to drag down the global shipping industry at an investor meeting on Wednesday (Sept. 20).

Despite major international financial institutions upwardly revising growth data for a number of economies, Yang Ming says shipping capacity oversupply remains unchanged. The company added that a number of uncertainties could still impact the industry in the fourth quarter.

Yang Ming said it's still in the process of making route adjustments for 2024, though it is expecting little change when compared to its current capacity. As for new routes, this too is still under evaluation, per Liberty Times.

The third quarter of each year is typically peak season for marine shipping companies, and Yang Ming said freight rates on east-west routes rebounded during this period. However, Yang Ming said the global economy is still mired in high inflation, high shipping capacity, and rising interest rates.

An imbalance between supply and demand continues to exist, according to Yang Ming, with little improvement expected before the long Chinese National Day holiday beginning on Oct. 1. This means freight rates will correct downward as developed markets such as Europe and the United States also begin entering the slow season for shipping.

Due to these factors, Yang Ming is pessimistic about business growth in the fourth quarter, as more observation is needed regarding future freight rates.

In terms of cargo load on individual routes, the cargo volume in the third quarter was slightly better than that of the first six months of the year, but the peak season performance on main routes still did not meet expectations, according to Yang Ming. The company said this is an indication that demand has yet to fully recover.

Yang Ming said that following Chinese National Day, Europe and the United States start to celebrate successive holidays such as Thanksgiving and Christmas. If these economies are successful in reducing inventory levels, this could lead to a recovery in cargo volume.

As for shorter shipping routes within Asia, Yang Ming says China’s slumping economy impacted these routes, with capacity continuing to be in oversupply and little prospect of improving.