News / Yang Ming expected to remain in the red as industry confidence remains weak

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Taiwanese ocean carrier Yang Ming is expected to post another quarterly net loss when it publishes its results on 16 May, according to Alphaliner.

This follows a net loss of TWD14.9bn ($492m) in 2016 and a deficit of $258m recorded in the year before.

If the analyst is correct in its calculations, a Q1 loss, as many of its peers look likely to report a return to profitability, will do nothing to assist the perception of the container line in the eyes of anxious shippers and service providers, still reeling from last year’s demise of Hanjin Shipping.

Last week saw the resumption of trading in Yang Ming shares on the Taiwan Stock Exchange, following a two-week suspension, and Alphaliner noted that after an initial spike on 4 May – the first day’s trading – to TWD13.30, its shares slumped in the following days to close at TWD11.05 yesterday.

Meanwhile, Yang Ming PR has been sparse. On 2 May, it released a brief, two-paragraph customer advisory designed to ease the fears of shippers, announcing the resumption of share trading, and added: “ Yang Ming is expected to complete the second stage of its recapitalisation by June 2017. At that time, Yang Ming will be announcing the identities of the investors who participated in this round of issuance, as well as the details of this offering.”

The statement did little to restore the confidence of shippers in Asia and elsewhere and The Loadstar has been told off the record by several UK shippers that they will not support the carrier until its financial position is resolved.

Moreover, sources at service providers have told The Loadstar that although Yang Ming claims “business as usual”, it is being conducted with added caution.

In an earlier advisory targeting its service providers, the carrier said: “For the avoidance of doubt, Yang Ming has never made any demands to its vendors to either modify or terminate any existing obligations. Yang Ming is not in default of any vendor obligations, large or small.”

This advisory was issued in reference to suggestions that Yang Ming had contacted shipowners to renegotiate charter hire contracts, an almost unprecedented practice in shipbroking that was, nevertheless, used by negotiators for Hyundai Merchant Marine (HMM) and thereafter Hanjin.

Alphaliner notes that shipowners Seaspan and its affiliate, CGI, have a charter exposure of 13 ships on hire to Yang Ming, with Greek owner Danaos having eight vessels on time charter to the carrier.

The contracted revenue of both of these containership owners was significantly impacted by payment arrears and charter defaults as a consequence of the bankruptcy of Hanjin.

In January, Yang Ming was identified in a research paper by Drewry Financial Research Services as a “red flag risk”, adding that the world’s eighth-largest carrier had “taken the slot left vacant by Hanjin”.