A possible winter coronavirus spike and the escalating US-China tensions are casting shadows on the liner shipping outlook, said the South Korean carrier, which largely narrowed its net losses in the first half.
HMM has warned of murky prospects for container shipping despite a significant improvement in its bottomline for the first half of 2020.
“Market outlook remains uncertain as coronavirus can re-emerge for the upcoming winter season and growing geopolitical tensions between US and China are definitely one of the most important variables,” said the South Korean carrier in a results release.
The company narrowed its net losses to $31m in the period from January to June from $314m during the same period in 2019. It reported $23m net profits in the second quarter versus $166m deficits a year ago.
Revenue in the six months dipped 0.9% year on year to $2.2bn while handling volume dropped 20.9% to 1.8m teu, indicating stronger freight rates this year.
“The profitability in the main East-West trade lanes contributed to enhanced business performance,” said HMM.
It expected freight rates on the transpacific trade to remain strong in the short term, driven by increased demand from the US, where economic activities have started to resume.
In a Wednesday report, Alphaliner noted that spot rates on the North China to US West Coast trade had surged to their highest level ever – about 120% higher than the year-ago level – even though carriers were reinstating blanked sailings.
“The combination of higher rates and neutral or expanded capacity indicates strong consumer demand, with Chinese exporters wanting to ship as much product as possible before a potential second Covid-19 wave,” said the consultancy.
On the Asia-North Europe trade, HMM forecast a rather balanced market. But it said the situation in intra-Asia trade will be challenging amid rising competition between carriers and oversupply of capacity.
The Seoul-based shipping line is now a full member of The Alliance, which also consists of Hapag Lloyd, Ocean Network Express and Yang Ming.
It took delivery of containership HMM Southampton earlier this week, the ninth unit out of a dozen 23,792-teu series containerships ordered in 2018 at two Korean yards.
The ship will join The Alliance’s Far East – Europe service FE3 at Yantian, to replace Hapag-Lloyd’s 14,993 teu vessel Al Murabba.