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Wisdom upbeat over 2020, expects volatility to ease

Wisdom Marine Lines Co., the nation’s largest dry bulk shipping company by fleet size, yesterday said it is upbeat about next year, as it expects market volatility to ease this quarter and demand to improve as rules imposing higher standards on sulfur from ship exhausts take effect.

Unexpected market volatility came from China’s ban on coal for heating this winter, Indonesia announcing a ban on nickel exports from Jan. 1, and the US and China’s delayed negotiation on wheat purchases due to a canceled APEC meeting in Chile last month, the firm told an investors’ conference in Taipei.

“They all had a negative outlook for the dry bulk shipping industry this quarter, with spot shipping rates declining on market expectations of lower freight volumes for the three commodities,” Wisdom said, adding that the fourth quarter should have been a peak season.

Wisdom, which makes about 20 percent of its revenue from short-term leases, was affected by the deteriorating rates, reporting annual revenue declines of 0.16 percent and 4.16 percent in October and November respectively, company data showed.

However, Wisdom expects the volatility to be short-term and demand to recover, as the US and China are likely to reach a preliminary trade deal and Indonesia would eventually lift its ban because it cannot use all the nickel ore it produces, the company said.

As merchant fleets need to begin burning low-sulfur fuel from Jan. 1 to comply with International Maritime Organization rules to help ease health concerns and prevent acid rain, oversupply of vessels is expected to improve next year, it said.

Contract rates for one-year leases are expected to grow 4 percent annually for the whole of this year and advance 12 percent year-on-year next year, Wisdom said, adding that it would negotiate with clients over the rates for 40 vessels next year.

Wisdom plans to take delivery of seven new vessels next year, two of which would be equipped with scrubbers to meet clients’ needs, it said.

Unlike Evergreen Marine Corp., which would install 130 scrubbers to upgrade its entire fleet, Wisdom said it would only equip some of its vessels with scrubbers, leaving it up to clients whether to install scrubbers or use low-sulfur fuel.

Net profit rose 56 percent annually to NT$1.75 billion (US$57.4 million) for the first three quarters, or earnings per share of NT$2.76, company data showed.
Source: Taipei Times

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