The three shipping companies Evergreen, MSC, and Dafei are collectively singing in the market: the recovery will start in the third quarter!

The shipping logistics market has been somewhat bleak during this period!
In the past few weeks, many domestic financial media and video bloggers have posted articles and videos stating that many ports in China have been filled with containers, and some ports have even stacked containers on eight floors.

Outsiders are not optimistic about foreign trade exports and the international shipping logistics industry, so how do the major players in the industry view the follow-up market?


Remain optimistic about the rest of the year

Soren Toft, MSC's CEO who recently attended the TPM23 conference in the United States, told the media that the company is optimistic about the rest of the year. "I would like to say that we are moderately optimistic that the world will recover again. I believe that by the middle of this year, we may start to see a recovery in trade activity."

"I think as we pass the second quarter and enter the middle of the year, we will start to see some positive signs," said Toft   However, it also stated, "Although inventories in North America and Europe are still too high, depressing trade volumes, once inventories decrease, freight orders will rebound." At the same time, Toft also believes that high inventory in the European and American markets is an important reason for the current downturn in the freight market.

Toft also said, "We still believe that the economic situation in the United States is very optimistic." "It is a net energy exporter... I believe they have been able to slowly reduce inflation and the employment market is very strong. Basically, it is full employment. Therefore, we still believe that the United States market is still very strong and very positive."

The CEO of the world's largest shipping company also said, "He is also beginning to see signs that trade routes from China to Europe are strengthening, which is a sign of consumer demand recovery.". “


EMC Shipping:

The shipping market began to pick up in June

In the first quarter of this year, the trend of maritime transportation was sluggish, and Xie Huiquan, General Manager of Evergreen, released good news. He said that the maritime transportation market began to warm up in June and turned better in the second half of the year. In order to expand the operation scale and strengthen the competitiveness of the route, EVA has invested approximately $800 million to lease nine container ships, and is expected to invest in ocean routes such as Europe and the United States to improve operational efficiency.

EMC's consolidated revenue in the first two months of this year was 44.922 billion yuan (NT $, the same below), a year-on-year decrease of 59.94%. Due to the impact of the Chinese New Year holiday and the epidemic on the production line, the volume of goods decreased and freight rates continued to decline, presenting a "price decline and quantitative contraction".

Xie Huiquan said that in the first quarter, the shipping season is indeed very weak, and it is estimated that the freight rate will soon fall to the bottom. The downward revision of the freight rate for the United States, West America, and East America will start to decrease, and the second quarter will be slightly better than the first quarter. The gradual warming will start from June, and the amount will still depend on the degree of inventory depletion. The market situation of various routes is relatively strong with the US line and flat with the European line. The key to market recovery is when the Russian-Uzbekistan war will stop.

On the supply side, Xie Huiquan pointed out that environmental regulations are expected to absorb about 10% of the shipping space upon arrival. Considering the addition of new shipping capacity, the market's supply of shipping space exceeds demand. If demand picks up in the second half of the year, the gap between supply and demand will narrow, and the shipping industry is expected to improve.

Xie Huiquan said that in order to expand the operation scale and strengthen the competitiveness of the route, the subsidiary Evergreen Asia plans to invest approximately $800 million in ocean routes such as Europe and the United States to enhance operational efficiency by leasing nine container ships from Evergreen Shipping Singapore, including four 14000 TEU (20 foot container), five 20000 TEU container ships, and desulfurization tower equipment for seven of them.

In response to the loss dilemma faced by peers in the fourth quarter of last year, Xie Huiquan stated that Evergreen has a high proportion of owned ships and low charter costs, with average unit operating costs superior to peers. Evergreen is confident in its operations this year.



Already seeing signs of improvement in the global economy

Last week, CMA CGM, the world's third largest container shipping company, announced its fourth quarter and annual report for 2022.

According to data, the Marseille based company's annual profit was $24.9 billion, an increase of 7% compared to 2021. However, its reported fourth quarter profit was $3.04 billion, a decrease of 3.7% compared to the same period in 2021. It can be seen that the freight market has indeed declined in the second half of last year.

The company said that inflation and shifts in consumption had hit consumer demand, which together affected freight rates, especially in the fourth quarter.、


CMA CGM also confirmed that "the wave of inventory destocking in the United States" has hit the demand for restocking of goods, and during this period, the traffic volume of the east-west route has decreased by 7.2%, although CMA CGM stated that its north-south route is more flexible.

However, like MSC, CMA CGM also indicated that there were signs that the economic slowdown would not be as dire as initially feared.

"In the United States, despite the very aggressive tightening measures taken by the Federal Reserve in recent months, consumer spending and the labor market remain resilient. In the European Union, economic recession has also been temporarily avoided. Some emerging markets in Latin America and Southeast Asia remain strong," the company wrote in its report.