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Yang Ming today posted a net loss of $139m for 2019, as a 4% increase in volumes could not offset losses attributed to new accounting rules.
The Taiwanese carrier’s revenue was also up, by 5% on the previous year, to $4.8bn earned from carryings of 5.4m teu.
It said that without the bookkeeping negative its strategic decision to not exercise its options on the return to owners of 14 “high-cost chartered vessels”, there would have been a $45m improvement to its bottom line.
And, it said, the adoption of new IFRS 16 accounting measures on Yang Ming’s leased containers and the high number of chartered ships – 70% of its 90 vessels – was a further $29m negative on its P&L account for the year.
The carrier said it would continue its strategy of redelivering chartered tonnage this year, and several of its older owned-vessels would be scrapped to accommodate an aggressive newbuild delivery programme of 24 ships with a capacity of 198,000 teu.
Yang Ming said it would deploy the newbuild 11,000 teu vessels across its network, as well as “flexible” 2,800 teu ships on shortsea routes to reduce its operating costs.
It also said its strategy was to increase the percentage of its owned box fleet “aimed at easing the pressure from the high leasing ratio”.
It said: “Looking ahead to 2020 in the aspect of operational strategies, with the cooperation of THE Alliance, including the addition of a new partner [HMM] and its extension through 2030, Yang Ming can upgrade its services through the most suitable vessel deployment, rationalised port rotations and improved transit times to facilitate the optimisation of its service network.”
There was no mention in the report of the impact of the Covid-19 crisis on its business plan, although THE Alliance partner Hapag-Lloyd had warned its customers of “adjustments to the network” in the months to come.
Indeed, recently the 2M, THE and Ocean alliances have announced a number of emergency blank sailings from Asia as demand in Europe and the US is halted by consumer lockdowns and shops being shuttered.
New THE partner from tomorrow HMM is to begin adding some 20 newbuild ULCVs of 400,000 teu to the network this year and next. That will see the South Korean carrier jump ahead of Yang Ming in the container rankings, to eighth, with a capacity of some 800,000 teu.
Hapag-Lloyd is the only profitable carrier within THE Alliance, posting a net profit of $418m for last year.
According to Alphaliner, as part of the condition of its acceptance into the VSA, HMM has been required to contribute $25m to THE Alliance’s $75m contingency fund, set up in March 2017 to act as a safeguard against one of the carriers declaring insolvency, as was experienced in 2016 with Hanjin Shipping.
According to Alphaliner Yang Ming will contribute around $10.5m to the fund, Hapag-Lloyd $16.3m and ONE $23.3m.