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Wisdom Marine expects demand to recover in Q2

Wisdom Marine Lines Co yesterday said it expects demand to recover next quarter and freight rates to rise on expectations of more Chinese companies resuming full operations, as well as increasing orders for bulk commodities, especially grain transportation from South America.

The company expects limited impact from falling crude oil prices, as fuel costs make up less than 2 percent of its operational costs.

It is to take delivery of seven new energy-efficient ships this year and retire several old vessels to keep the average age of its fleet at six years old.

Wisdom Marine, the nation’s largest dry bulk shipper, last week reported revenue of NT$844 million (US$28.1 million) for last month, down 19.84 percent from a year earlier and 14.9 percent from January.

The company attributed the decline to the COVID-19 outbreak, which has not only seen Chinese manufacturers scale back deliveries of bulk commodities, but has also resulted in a labor shortage at Chinese ports, disrupting the shipping industry.

The Baltic Dry Index, which tracks the shipping costs of raw materials, such as coal, iron ore and grain, retreated by 31 percent from an average of 668 in January to 460 last month, the company said.

Meanwhile, Wan Hai Lines Ltd also said that the outbreak had been a drag on its business last month.

The company makes 70 percent of its revenue on intra-Asia routes.

Wan Hai yesterday reported revenue of NT$5.01 billion for last month, a 1.44 percent decline from a year earlier.

The company “had forecast a worse revenue performance, as China makes up a big part of its total revenue,” spokeswoman Laura Su said by telephone.

However, rising exports from nations in Northeast Asia and Southeast Asia helped offset the impact, she said.

The plunge in crude oil prices would ease the burden on shippers, which would face lower fuel costs in the long term, she added.

However, if oil prices continue falling, “it might indicate a slowdown in global consumption … which would damage demand for shipping,” Su said. “We need to keep monitoring it.”
Source: Taipei Times

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