News Highlights week: 20 - 2022

This contraction is however mainly driven by a fall in rates in the smaller sizes (1,000-1,300 teu), with rates on the larger vessels showing so far no evidence of any significant weakening. The softening in charter rates is however gradually expanding to the 1,700 and 2,500 teu segments and could spread further.
It remains to be seen if the peak cargo season, kicking in from August, will stimulate demand for tonnage and push charter rates up again, but for now, the trend is bearish. 

This being said, Alphaliner believes that the continued shortage of ships, especially for prompt tonnage, and persistent disruptions in the supply chain, with continued lockdowns in China and congestion issues in various ports, will help keep charter rates at high levels in the short term. 
However, the economic and geopolitical uncertainties continue to darken the longer-term outlook and threaten cargo demand prospects. The high level of inflation around the world is putting a damper on consumers’ discretionary spending, particularly for nonessential goods, which account for a large proportion of cargoes carried on container vessels. 
The lower volumes are already translating into falling spot cargo rates, with the SCFI now in its 18th week of uninterrupted decrease. 
Meanwhile, the knock-on effects of the war in Ukraine contribute to freezing the world economic growth, with ongoing sky-high fuel prices and threats on grain supplies. 
Against these uncertainties, carriers are adopting a more prudent attitude in securing tonnage. Many of them have decided to temporize on their charter requirements or prefer to fix for shorter employments of 12, occasionally 24 months, versus the 36, 48 or even 60 months charter durations commonly agreed upon until April. 
Port congestion in North Europe continues to worsen
Very high yard densities at North European container terminals and inland transport bottlenecks are aggravating port congestion problems in the trade between the Far East and North Europe.

Container ships deployed on this route currently need on average 101 days to complete a full round voyage. This means that they arrive on average 20 days late in China for their next round trip, forcing carriers to blank some sailings as there is no ship available. 
These delays have further increased during recent months as Alphaliner reported average delays of 17 days in November last year (see newsletter 2021-45) and again 17 days last February (see newsletter 2022-07). 
The time needed to discharge and load at the three biggest European container ports was a total of 36 days between arrival at Rotterdam and departure from Hamburg. Such delays cannot be caught up by sailing eastbound at full speed.
Evergreen Marine caps off rankings rise with highest Q1 margin to date
Taiwan’s Evergreen Marine (EMC), Yang Ming and Wan Hai Lines reported a collective operating profit of TWD 238.7 bn (USD 8.01 bn) for the first three months of the year after revenues rose 9% versus the previous quarter. 
Evergreen was the strongest performer, reporting the highest operating margin among the three, to coincide with its recent move up to position six in the global carrier rankings (see page 14). Operating profit (EBIT) jumped 23% quarter-on-quarter to TWD 117.2 bn (USD 3.9 bn), equivalent to an operating margin of 68.8%. 

Meanwhile, revenue for the world’s now-6th largest carrier came in at TWD 170.8 bn, a 90% increase year-on-year and 9% higher quarter-on-quarter. 
The Taiwanese lines, which have a smaller proportion of contract business than some of their European counterparts, nevertheless benefited from higher freight rates, port congestion and a pre-Chinese New Year cargo rush. 
Yang Ming, which logged the highest operating margin the previous quarter, saw a slowdown in growth, with revenues and profits increasing only 4% from Q4. The carrier posted operating profits of TWD 72.6 bn (USD 2.4bn) on revenues of TWD 106.7 bn. 
Wan Hai Lines meanwhile logged operating profits of TWD 48.9 bn (USD 1.6 bn) on revenues of TWD 80.5 bn. As with the other lines, the numbers marked a new record for the carrier, which is increasingly expanding outside its intra-Asia specialism.