Wan Hai says it may be open to reducing shipping contract rates, 'short-term'
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Although troubled Taiwanese ocean carrier Yang Ming managed to improve its financial position in the second quarter of the year, it remains in the red.
Yang Ming reported revenue of $1.1bn for the period, up 19.6% on the same quarter of 2016, from a 6.8% increase in volume to 1.15m teu.
The result was a net loss of $14.7m for Q2 and a deficit of $43.7m for the six months.
Yang Ming said the result showed a “consistent improvement” and said that it had “taken the initiative to control costs and to develop a new strategy to optimise its financial position”.
The carrier has been operating under severe pressure for some time, and in January Drewry Financial Research Services identified Yang Ming as a “red flag risk”, suggesting it had taken the slot left vacant by Hanjin Shipping with the most leveraged balance sheet in the industry.
Faced with shipper and counterparty concerns, heightened after the collapse of the world’s seventh-biggest container line in August 2016, Yang Ming had sought to calm speculation by bringing in new investors to prop up its balance sheet.
Following February’s $54m share sale to state-run institutions, Yang Ming announced in May that it would confirm details of the new investors within a month, but the following month pleaded for more time to “achieve its recapitalisation goal”. Then, on 14 July, Yang Ming issued a statement that it intended to make a public offering of 500 million shares.
Meanwhile, the US Federal Maritime Commission (FMC) has confirmed that THE Alliance, of which Yang Ming is a partner along with Hapag-Lloyd and soon-to-be-merged Japanese carriers K Line, MOL and NYK, has filed an amendment to “add further detail to protections in the event of an insolvency”.
THE Alliance filed the amendment on 7 August seeking authority to form, contribute funds to and develop rules for a contingency fund designed to protect the operations of the VSA grouping should one of its members become bankrupt.
When Hanjin went into receivership on 31 August 2016, around 500,000 teu, worth some $14bn, was stranded for weeks on 100 vessels around the world. The bankruptcy had a serious impact on containers booked by other partners in the now-defunct CHYKE alliance but loaded on Hanjin ships.
FMC commissioner William Doyle said that it was important that “another Hanjin debacle does not happen”.
He added: “Looking back, things could have been done differently. Looking forward, things must be done differently. We need safeguards and THE Alliance is heading in this important direction.”