Evergreen Marine Corp president Eric Hsieh has acknowledged that the company’s recent order for two dozen 16,000 teu methanol-fuelled ships may “be too much”, as the Covid-fuelled boom is over and liner operators are no longer making money every day.
On Friday, Mr Hsieh said the supply-demand imbalance would continue and 2024 would be challenging.
He also said methanol-propelled ships “did not mean zero emissions”, and Evergreen could explore hydrogen-powered ships, though this would be some time away.
Evergreen operates 213 ships, of which 61% are owned. Evergreen has 47 vessels of over 441,000 teu on order and the 16,000 teu ships ordered in July put Evergreen on track to surpass Hapag-Lloyd in the liner rankings, but poor market conditions will make it difficult to fill the slots.
Mr Hsieh said the ‘tsunami-like’ surge in freight rates had receded quickly, and the shipping market was no longer as prosperous as in the past two or three years.
He said: “After the pandemic, supply chains have normalised, terminals are no longer congested and on-time arrivals continue to improve, being close to 70% now. Shipping capacity has also fully returned to the market.”
Demand-side challenges persist, particularly reduced consumption power due to inflation, with US and European retailers saddled with high inventory.
Mr Hsieh said: “Shipping lines are seeing turnover and profits falling from peak levels, like a roller coaster…I have a heavier feeling than before.
“The fourth quarter is a relatively slow season. The global economy is still affected by high inflation and interest rates, and the cargo volume of each route is generally low. Although there are short-term back-to-school surges – Thanksgiving, Christmas and other favourable conditions – the market remains oversupplied, and Q4 performance is likely to be weaker than that in Q3.”
Mr Hsieh also disclosed that Evergreen’s revenue in the first nine months of the year fell 60% from last year, to TW$207.04bn ($6.42bn).
He said Evergreen’s next round of capital investments would focus on terminals, aiming to reduce the time ships spend in port. Evergreen’s recent key terminal investments include Kaohsiung’s Terminal No 7, Rotterdam’s Euromax terminal and Egypt’s Abu Qir Container Terminal.