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Yang Ming Marine Takes Cautious Stance Amidst Global Shipping Uncertainties

Taiwan
y 2609.TW Mid and Small Cap 2000
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Facing persistent uncertainties, Yang Ming Marine Transportation Corp, Taiwan’s second-largest container shipper, braces for challenges in the first half of 2024. The global shipping industry grapples with overcapacity, high inventory, geopolitical tensions, and waning purchasing power due to inflation, according to the company’s post-earnings conference statement.

The Lunar New Year holiday’s cargo demand remains uncertain, contingent upon consumer demand recovery, with the holiday falling in February. Citing maritime consultancies Drewry, Alphaliner, and Clarksons, Yang Ming notes a looming oversupply of ships surpassing demand from 2023 to 2024, expecting convergence by 2025 at the earliest.

China’s projected weak growth momentum, forecasted at 4.6% by the IMF for next year, adds to the company’s concerns. Yang Ming operates a fleet of 93 vessels with a capacity of 707,000 twenty-foot-equivalent units (TEUs). Global shipping disruptions intensify as a drought restricts the Panama Canal, prompting Yang Ming to consider detours and potential surcharges. Cumulative revenue for the first 10 months is NT$119.2 billion, down 64.94%, reflecting industry challenges, while net profit sharply dropped to NT$6.08 billion. Container shipping constitutes 93.3% of Yang Ming’s business, with logistics, bulk shipping, and stevedoring comprising the remainder.

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