News / TS Lines eyes 'risky' return to long-haul trade with new ships

TS Kaohsiung. Photo: TSL

Taiwanese intra-Asia carrier TS Lines, which withdrew from its long-haul venture after the Covid-induced boom faded last year, is planning a comeback now freight rates have rebounded.

Founder and chairman Chen Te-sheng said the carrier had signed a letter of intent to order two 14,000 teu ships from China’s Shanghai Waigaoqiao Shipbuilding – vessels that could be assigned to the transpacific or Far East-South America routes after delivery in 2027.

TS Lines suggested its lack of large vessels had made it less competitive on long-haul routes in 2022, when it launched transpacific and Far East-Australia/New Zealand services when freight levels reached historical highs. But it retreated when the market normalised. At the time, the largest ships in the TS Lines  fleet were 4,000 teu.

A new prospectus was submitted last week to the Hong Kong Stock Exchange for a third attempt to get a listing, having seen its last two bids stone-walled by market corrections.

TS Lines’ 2023 revenue was $874.6m, down from $2.44bn in 2022, as the market normalised. Net profit plunged to $20.4m, significantly reduced from the $1.07bn and $1.08bn achieved in 2022 and 2021.

The 20^th largest operator, TS Lines claims to operate 44 ships, for 490,537 teu, including 35 owned vessels.

TS Lines admitted that it would be taking a risk in re-attempting long-haul services.

It said: “If we develop long-haul services too rapidly, we may encounter financial difficulties and risk overcapacity in a business downturn. On the other hand, if we fail to develop at a sufficiently rapid pace, we may lose market share and potential customers to our competitors.”

But Xeneta’s chief analyst, Peter Sand,told The Loadstar 14,000 teu ships would not be feasible for transpacific lanes, as they involve limited port calls.

He explained: “Operational smoothness is challenged by exchanging a huge number of containers in one port only. The Far East-South America lane, where more port calls can be done and larger ships deployed more efficiently, is a better operational fit.

“An operator doesn’t become more competitive by ordering larger ships. It’s all about having the customers around all the time to fill your ships. The larger the ships, the more cargo you need.”