An 11 percent decline in revenue contributed to a large decline in profits at Evergreen Marine for the third quarter. The growing Taiwan carrier reported 3Q 2013 net income of TWD 49 million ($about US$1.35 million) compared with TWD 2,540 million (US$85.8 million) in the year-earlier period.
Evergreen derives 26 percent of its revenue from Europe trades and 40 percent from the North America market, and “both the trades failed to meet industry expectations for a stronger peak season as weak market development and overcapacity pushed pricing down,” Drewry Maritime Equity Research wrote on Dec. 10. Rates were down in the third quarter by 19 percent on the Asia-Europe trade and 24 percent on the trans-Pacific, Drewry said.
Though Drewry says “the worst may be behind” Evergreen, given its dependence on long haul East-West trades, “we still remain cautious as industry oversupply will continue to pressurize the freight markets for the next 18-24 months. We expect (Evergreen) to return to full-year profitability in FY14 and believe the company’s profits will accelerate in FY15 as the underlying market improves and volume growth intensifies on fleet expansion.”
Evergreen is in growth mode and is recovering market share, having reentered the newbuild market after several years in which it was on the sidelines, from 2004 to 2010, due to an assessment by founder Chang Yung-Fa that prices for new ships were too high, according to Alphaliner. Evergreen has “historically adopted a cautious expansion strategy,” Drewry said. In 2010 Chang said the company planned to buy 100 new ships worth over $5 billion. The 45 new ships it has taken delivery of since then elevated its global market share in capacity deployed from a low of 3.8 percent in early 2012 to 4.6 percent as of November 2013, Alphaliner said. During that time its operated capacity grew from 607,000 TEUs to 806,000 TEUs. Evergreen’s new deliveries are set to accelerate in the next 15 months, Alphaliner said, as it will take delivery of 13 ships of 8,500 to 8,800 TEUs and nine ships of 14,000 TEUs.