The dumping trend of the shipping industry is temporarily difficult to change

Compared with 2012, the global containerization market was even worse than last year. The freight rates of the routes dropped almost completely, resulting in different levels of income decline. At the same time, due to the structural surplus of capacity and ineffective recovery of the market, the earnings of the liner companies accounted for a relatively small proportion. No matter whether it is an ocean trunk route or a regional route, the freight rates have been reduced to varying degrees. The liner company’s transportation revenue has been greatly reduced, affecting the overall profitability. From the operating data of seven major liner companies in China, only Haifeng International (01308.HK)'s liner shipping revenue increased slightly by 0.9% year-on-year. China Ocean Shipping, China Shipping Container Lines, Orient Overseas, Evergreen Shipping, Yangming Shipping, Wanhai Shipping, etc. The shipping revenue of the six liner companies fell. The drop in revenue makes it possible for the company to obtain only three liner companies, namely OOCL, Haifeng International and Wanhai Shipping, which will ultimately achieve operating profit in the liner transportation industry.

Decline in freight rates leads to lower revenue

On the whole, the container shipping market remained sluggish last year, and the freight rate of trunk lines dropped sharply year-on-year, which was the main reason why most liner companies still suffered losses.

According to relevant data from the Shanghai Shipping Exchange, the average annual freight rates (seaborne and ocean shipping surcharges) from Shanghai exports to European and Mediterranean basic port markets were US$1,090/TEU and US$1,159/TEU, respectively, down by 20.9% and 14.5% year-on-year respectively. The average annual freight rates (sea freight and sea freight surcharges) of Shanghai's basic exports to the West Coast and the US East Coast were US$2028/FEU and US$3285/FEU, respectively, down 11.7% and 4.2% year-on-year; Shanghai’s exports to Australia and New Zealand’s basic The average annual freight (sea and ocean shipping surcharges) for the port was US$818/TEU, which was a decrease of 11.2% year-on-year.

China COSCO achieved operating revenue of 42.535 billion yuan in container shipping and related businesses last year, a year-on-year decrease of 1.51%; operating cost of 42.976 billion yuan, an increase of 0.1% year-on-year; gross profit margin of -1.04%, a year-on-year decrease of 1.63%; and a net profit of 1.387 billion yuan. Yuan, the net profit attributable to owners of the parent company was a loss of 1.426 billion yuan, compared with a loss of 2.28 billion yuan in the same period of 2012. Last year, the average single box revenue achieved 4481.86 yuan/TEU, a year-on-year decrease of 10.42%, and the average single box revenue in USD accounted for 723 US dollars/TEU, a year-on-year decrease of 8.8%.

CSCL's liner shipping revenue accounted for 87% of the company's operating income. Last year, liner shipping revenue was 20.497 billion yuan, down 6.4% year-on-year; operating cost was 33.062 billion yuan, down 0.3% year-on-year; gross margin was -8.4%, down 6.7% year-on-year. The average freight rate was 3,709 yuan/TEU, a decrease of approximately 7.6% year-on-year. Among them, the average freight rate for foreign trade routes was 5,172 yuan/TEU, a year-on-year decrease of approximately 13.5%; the average freight cost for domestic trade routes was 1,766 yuan/TEU, an increase of 6.6% year-on-year. In terms of sub-routes, the Pacific route achieved operating revenue of 9.847 billion yuan, down 7.7% year-on-year; European land routes realized operating revenue of 7.837 billion yuan, down 11% year-on-year; Asia-Pacific routes achieved operating revenue of 5.847 billion yuan, down 4.7% year-on-year; domestic routes achieved Operating income was 6.214 billion yuan, up 2.7% year-on-year; other routes achieved operating income of 1.137 billion yuan, down 13.3% year-on-year.

Last year, OOCL's liner shipping business achieved operating income of 5.609 billion US dollars, a year-on-year decrease of 4.9%. From the point of view of the income of the sub-routes, it is even lower across the board. Among them, Pacific routes were US$1.92 billion, down 3.4% year-on-year; Asia-Europe routes were US$1.03 billion, down 11.4% year-on-year; Atlantic routes were US$6.2 billion, down 6.8% year-on-year; even in Asia/Australia/Asia routes. On advantageous routes, operating income was US$2.05 billion, which was still down 2.1% year-on-year. In terms of shipment volume, despite the fact that overall shipment volume increased by 1.5% year-on-year in the previous year, only Asia/Australasia and Asia routes achieved a growth of 5.6%, while other ocean-going routes decreased year-on-year. Among them, the Pacific routes decreased by 1.6% year-on-year; Asia-Europe routes decreased by 4.7% year-on-year; Atlantic routes decreased by 3.2% year-on-year.

Last year, Evergreen Shipping achieved a revenue of NT$128.24 billion from its liner shipping business, which was a decrease of 2.21% year-on-year. Specifically, on the sub-routes, the Pacific route was NT$55,221 million, accounting for 43%, up 2.56% year-on-year; European routes were NT$28,252 million, accounting for 22%, down 17.26% year-on-year; Asian routes were NT$24.4 billion, accounting for 19%, down 2.21% year-on-year; other routes achieved operating revenue of NT$20,547 million, accounting for 16%, an increase of 11.76% year-on-year.

Yangming Shipping achieved operating revenue of NT$118.874 billion last year and net profit of NT$2.946 billion. Among them, the liner transportation revenue was NT$110.46 billion, which was a year-on-year decrease of 11.09%; the sectoral loss was NT$8.764 billion, and the loss increased by NT$5.625 billion, a significant year-on-year increase of 279.2%.

The ocean liner-based liner companies are plagued by the decline in freight rates. Haifeng International and Wanhai Shipping, which mainly operate routes in Asia, are fortunate in many, although freight rates have also declined, but they are relatively stable, so both liner companies last year Earn profits.

Last year, Haifeng International achieved operating income of 1.267 billion U.S. dollars, a year-on-year increase of 4.5%; and a net profit of 112 million U.S. dollars, a year-on-year increase of 33.95%. The average container freight rate decreased from USD 539/TEU in 2012 to USD 486/TEU last year, a decrease of 9.83%. Revenue from sea transportation services was US$973 million, a slight increase of 0.9% year-on-year; gross profit was US$44.446 million, a year-on-year decrease of 6.78%; container traffic was 1981576 TEU, an increase of 11.7% over the same period of last year.

The contribution of Wan Hai Shipping's Asian regional service lines accounted for more than 80% of the total revenue. Last year, Wanhai Shipping achieved operating revenue of NT$59,989 million, which was a decrease of 5% year-on-year; net profit was NT$2,129 million, a year-on-year increase of 16%. Wanhai Shipping pointed out that in addition to the relatively stable volume of goods in Asia, profitability can be mainly attributed to the company's active control and control of costs, and it insists on no competition for price competition.

Capacity adjustment into consensus

Based on the trend of large-scale shipbuilding and environmental protection in the shipping market, liner companies have accelerated the pace of structural adjustments in their transportation capacity.

Last year, China COSCO Group had no new container ship orders (shipping in shipyards). As of the end of last year, China COSCO delivered 14 new container ships throughout the year with a total capacity of 96,000 TEU. The self-operated fleet comprised 173 container vessels with a capacity of 786,300 TEU. The scale of operating capacity increased by 8.6% year-on-year (excluding rental capacity 15 Ships, 91.9 thousand TEU); holds orders for 4 container ships, totaling 53,400 TEU.

Last year, CSCL continued to adhere to the development road of low fuel consumption, large-scale and modern fleets, and seized the opportunity of the world's low cycle of shipbuilding industry and the decline in the prices of new ships to custom-build 5 19,000 TEU vessels and receive 4 4700TEU vessels. Increase the retirement and disposal of old and small ships. Through the optimization and adjustment of a series of fleet structures, the fleet size reached 611,000 TEU, a year-on-year increase of 2.6%, with an average age of 8.1 years and an average single-cabin space of 4,126 TEU.

Last year, OOCL did not order a new ship; from the Hudong Zhonghua (Location Review News) shipyard received two 8888TEU vessels, and South Korea’s Samsung Heavy Industries received eight 13208TEU vessels. Last year, OOCL had a capacity of 49.61 million TEUs, a year-on-year increase of 9.7%, an increase of 19.3% over 2011 and an increase of 29.2% over 2010. At present, handheld orders will be delivered this year and next.

With good operating cash flow, Haifeng International constantly seeks low-cost development opportunities. Last year, Haifeng International delivered a total of 1 new container ship and 4 used container ships. Haifeng International believes that adding new ship orders when the ship's price is low will help expand the scale of its own fleet and establish long-term cost advantages. At the end of last year, Haifeng International had 32 self-owned container ships and 29 container vessels, with a total capacity of 63,800 TEU and an average shipping age of 7.9 years.

Alliance competition becomes a new trend in the market

On April 25, OOCL’s quarterly report showed that OOCL’s overseas cargo traffic increased by 8.9% year-on-year; total revenue was US$1.388 billion, up 1.7% year-on-year; average revenue per TEU dropped 6.6% year-on-year.

On April 30, the China Ocean Shipping Quarterly Report showed that China COSCO achieved operating income of 14.209 billion yuan, and the net profit attributable to shareholders of listed companies was a loss of 1.88 billion yuan. Among them, the container shipping business realized operating income of 10.013 billion yuan, an increase of 1.77% year-on-year.

On April 30, a quarterly report of CSCL showed that CSCL achieved an operating income of 8.56 billion yuan, a year-on-year increase of 5.73%, and a net profit attributable to shareholders of listed companies of 61.39 million yuan, which successfully turned losses into profits.

In addition, according to the data of the Hong Kong Stock Exchange and the Taiwan Stock Exchange, Haifeng International achieved a net profit of 21.784 million US dollars in the first quarter, an increase of 18.93% year-on-year; Wanhai Shipping realized a net profit of NT$125 million, and Evergreen Yangming Shipping is still losing money.

According to Clarkson's prediction, the global capacity of the entire container fleet will increase by 4.6% this year, a year-on-year decline of 0.2%; the growth in container volume demand will accelerate from 5% last year to 6%. However, structural contradictions in market capacity are still prominent. This year's new shipments of over 12,000 TEU vessels accounted for 41% of the total new container shipping capacity, an increase of 5% year-on-year.

With the demand side gradually recovering, the gap between supply and demand is expected to narrow. The measures such as idle capacity, slowing down, dismantling ships, and diversion of transport capacity used by liner companies can also relieve supply and demand pressures to a certain extent, but the overall imbalance of supply and demand in the container shipping market is short-term. It is still difficult to achieve substantive improvement within the country. In a situation where the industry has continued to slump, more and more liner companies have chosen to strengthen cooperation, improve business structures, and improve shipbuilding technologies and other competitive means.

In the short term, the biggest uncertainty in the container shipping market mainly lies in two aspects: First, the strength and regional differences in global economic recovery affect the shipping market structure and supply-demand relationship. Second, liner company alliances have become a trend, and the “big league” pattern has gradually Forming will have a significant impact on the market's co-occurrence pattern.

The current container shipping market has formed three major alliances: P3 network (to be approved), G6 alliance and CKYHE alliance. Experts pointed out that to understand why the alliance is spreading rapidly, it is necessary to understand the background of the current market. First, the era of rapid economic growth has passed and is reflected in the shipping market. In the future, it will focus on low growth or recovery. Second, the increase in the size of the ship caused the growth of the capacity to exceed the growth in demand, and at the same time brought about a re-layout of routes. Third, the continuous development of information technology has brought convenience to cooperative transportation, making it possible for large-scale global cooperation operations.