Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Yang Ming Marine Transport / Event-Driven

Drewry's released its latest Container Forecaster report, published on the 30 June, forecasting EBIT for the container carriers of US$88bn in 2021, possibly as high as US$100bn.
To put that in context, in February 2018 McKinsey &amp; Company<a href="https://www.marinelink.com/news/overcapacity-struggles433904" target="_blank" rel="noopener"> estimated</a> that low rates of returns for container shippers had destroyed "over $100 billion in shareholder value over the last 20 years".
Therefore container shipping companies are effectively recouping 20 years of losses in one year.
As discussed in <a href="https://skr.ma/dft2W" target="_blank" rel="noopener">Squeeze Box: The Port Congestion Contagion</a>, container spot rates are up 1,000+% in the last year. According to Drewry, average freight rates (spot and contract) across global trades are expected to rise by around 50% in 2021, an uplift of as much as 30% on its March forecast.
According to <a href="https://theloadstar.com/i-paid-ridiculous-charges-my-cargo-still-got-rolled-and-the-carrier-wanted-more/" target="_blank" rel="noopener">Loadstar</a>, a "serious offer" of $25,000 per 40ft had been quoted to a shipper that needed to move 300 containers from Shanghai and Yantian to Los Angeles this month. A year ago, the spot rate was US$1,700.
That "offer" costs US$7.5mn. You could have bought a 15-year old 2800 TEUs vessel earlier this year for that kind of cash.
Spot rate quotations are blowing through measures from the Shanghai Containerized Freight Index (the most relevant index for containers) and the Drewry Index, as those spot prices are based on figures one week prior to a ship's departure. But given the unprecedented demand from exporters, slots are being offered by carriers closer to the departure date as they try to squeeze out all available cash.
As one commentator put it: "The shipper is going economy and their cargo is traveling first class". 
In this insight, I take a look at <a href="https://www.smartkarma.com/entities/yang-ming-marine-transport" target="_blank" data-smartkarma-citation="entities:8502:1" rel="noopener">Yang Ming Marine Transport (2609 TT)</a> which is up 3,380% in the last year, and whether this company still has legs.

Drewry's released its latest Container Forecaster report, published on the 30 June, forecasting EBIT for the container carriers of US$88bn in 2021, possibly as high as US$100bn.
To put that in context, in February 2018 McKinsey &amp; Company estimated that low rates of returns for container shippers had destroyed "over $100 billion in shareholder value over the last 20 years".
Therefore container shipping companies are effectively recouping 20 years of losses in one year.
As discussed in Squeeze Box: The Port Congestion Contagion, container spot rates are up 1,000+% in the last year. According to Drewry, average freight rates (spot and contract) across global trades are expected to rise by around 50% in 2021, an uplift of as much as 30% on its March forecast.
According to Loadstar, a "serious offer" of $25,000 per 40ft had been quoted to a shipper that needed to move 300 containers from Shanghai and Yantian to Los Angeles this month. A year ago, the spot rate was US$1,700.
That "offer" costs US$7.5mn. You could have bought a 15-year old 2800 TEUs vessel earlier this year for that kind of cash.
Spot rate quotations are blowing through measures from the Shanghai Containerized Freight Index (the most relevant index for containers) and the Drewry Index, as those spot prices are based on figures one week prior to a ship's departure. But given the unprecedented demand from exporters, slots are being offered by carriers closer to the departure date as they try to squeeze out all available cash.
As one commentator put it: "The shipper is going economy and their cargo is traveling first class". 
In this insight, I take a look at Yang Ming Marine Transport (2609 TT) which is up 3,380% in the last year, and whether this company still has legs. 

Yang Ming Marine (2609 TT): Cargo Shipping In First Class

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Equity Bottom-Up

<ul>
<li>Our analysis suggests container rate momentum remained +ive in March</li>
<li>Despite higher fuel expense, core container margins likely rose Y/Y in Q124</li>
<li>Our L/S pair trade? It's worked, a little, but Evergreen shares have stayed firm</li>
</ul>


Our analysis suggests container rate momentum remained +ive in March
Despite higher fuel expense, core container margins likely rose Y/Y in Q124
Our L/S pair trade? It's worked, a little, but Evergreen shares have stayed firm


Monthly Container Shipping Tracker | March Volumes Strong | Q1 Margins Likely Up Y/Y (April 2024)

<ul>
<li>Spot container rates have surged, owing to conflict near Red Sea / Suez Canal</li>
<li>On top of higher spot rates, imposition of new fees also boosting carrier revenue</li>
<li>Evergreen's average monthly US$ revenue increased from Q123 to Q423</li>
</ul>


Spot container rates have surged, owing to conflict near Red Sea / Suez Canal
On top of higher spot rates, imposition of new fees also boosting carrier revenue
Evergreen's average monthly US$ revenue increased from Q123 to Q423


Spot Container Rates Surge | New Fees Also Boosting Carrier Revenue | Increases Could Lift '24 Rates

Equity Capital Markets

<ul>
<li>So far in 2023 TS Lines has sold off close to one quarter of its shipping capacity</li>
<li>In the company's core market, Intra-Asia, it appears rates have bottomed out here in Q323</li>
<li>We also review Q2 financial results from TS Lines' main comp, Wan Hai Lines (WHL)</li>
</ul>


So far in 2023 TS Lines has sold off close to one quarter of its shipping capacity
In the company's core market, Intra-Asia, it appears rates have bottomed out here in Q323
We also review Q2 financial results from TS Lines' main comp, Wan Hai Lines (WHL)


TS Lines Pre-IPO | Slimming Down Fleet | Intra-Asia Market Update | Latest From Key Comp Wan Hai

AP Moeller - Maersk A/S / Equity Bottom-Up

<ul>
<li>Rates remain depressed but stable, and easier Y/Y comps will arrive in late Summer</li>
<li>Fuel costs should be a tailwind in Q2 results; Danish giant Maersk reports on August 4th</li>
<li>We expect Q2/H1 results to support our view that the worst of the storm has passed</li>
</ul>


Rates remain depressed but stable, and easier Y/Y comps will arrive in late Summer
Fuel costs should be a tailwind in Q2 results; Danish giant Maersk reports on August 4th
We expect Q2/H1 results to support our view that the worst of the storm has passed


Monthly Container Shipping Tracker | Rates Depressed, Stable | Worst of 'Storm' Passed (July 2023)

Taiwan

Yang Ming Marine Transport provides transportation services and handles domestic and foreign maritime services on cargos.  The Company also operates warehouse, wharf, tug, barge, and container freight station services as well as repairs, leases, and sells containers and chassis.

Yang Ming Marine Transport (2609 TT)

Yang Ming Marine (2609 TT): Cargo Shipping In First Class

Carriers have gone up A LOT. I think they can continue to go up a lot. And Yang Ming has the strongest forward growth profile out of the listed peers.

David Blennerhassett

Monthly Container Shipping Tracker | March Volumes Strong | Q1 Margins Likely Up Y/Y (April 2024)

Container rate momentum remained +ive in March, & we believe carriers' margins probably improved Y/Y in Q124 (despite higher fuel expenses). Our L...

Tracking Traffic

Spot Container Rates Surge | New Fees Also Boosting Carrier Revenue | Increases Could Lift '24 Rates

Spot container rates have surged, and carriers are also benefitting from newly-imposed ancillary charges. It's possible the ongoing conflict in the...

Tracking Traffic

TS Lines Pre-IPO | Slimming Down Fleet | Intra-Asia Market Update | Latest From Key Comp Wan Hai

So far in 2023 TS Lines has exited trades and sold off a chunk of its fleet. Intra-Asian market conditions may have bottomed, and we will know soon...

Tracking Traffic

Monthly Container Shipping Tracker | Rates Depressed, Stable | Worst of 'Storm' Passed (July 2023)

Our research tracking container rates and profitability suggests that the worst of the storm has passed, and that we should see easier Y/Y comps...

Tracking Traffic