Yang Ming Marine Transport Corp on Monday (Mar 14) inked a partnership agreement with Thailand’s Regional Container Lines Group aimed at pooling the companies’ resources to weather a persisting downturn in the sector.

Due to slowing growth in developed markets, the companies are hoping to further tap the Asian market, where growth has been more resilient.

The companies also announced on Monday plans to expand bilateral cooperation on terminal operations in Taiwan and Thailand, slot exchange and vessel chartering services, as well as laden trucking and equipment interchange contracts.

Yang Ming inks partnership deal

Image:Krijn Hamelink

The agreement is to improve vessel utilization, reduce leasing and other operational costs, and expand coverage and quality of liner services, the companies said.

“We are expecting a tough year ahead, but market conditions should improve as oil prices begin to normalize,” Yang Ming Marine chairman Frank Lu told reporters at a news conference.

“Earnings are likely to improve in the second half as commodity prices rebound and boost transport demand from producing nations,” Lu said.

Despite the downturn, he said that the company’s operations in Asia have remained profitable, backed by resilient demand among ASEAN countries, whereas conditions are much less favorable in long-haul lines to the US and Europe.

“Although recovery appears to be intact in the US market and Europe has stepped up quantitative easing measures to spur economic growth, we are not anticipating immediate improvement there,” he said.

Working with Yang Ming Marine, Regional Container Lines has reached a sizeable scale in Asia in recent years by growing its business in Thailand, using Singapore as an operational and transshipment center, Lu said.

“We have a long relationship through providing feeder services to complement Yang Ming Marine’s long-haul operations,” Regional Container Lines managing director and president Summate Tanthuwanit said.

Amid growing macroeconomic uncertainties across the globe, in particular softening demand in China, the marine transport sector has been weighed down by plummeting cargo volumes, suppressed shipping rates and oversupply, the companies said.

The Baltic Dry Index — which tracks the costs of transporting dry commodities including iron ore, cement, grain and fertilizer — last month dropped to 298, the lowest in the index’s three-decade history.

Yang Ming Marine reported that sales in the first two months of this year dropped 16.52 percent annually to NT$18.51 billion (US$563.13 million).

The company primarily provides domestic and overseas marine shipping services, warehouse, pier, tug boat, barge, container freight station and terminal operations, maintenance and repairs, among other businesses.

It operates various ship routes, including Asia-North America, North America-South America, Asia-Northwest Europe, Asia-Mediterranean, Asia-Black Sea and Intra-Asia.

Shares in Yang Ming on Monday closed up by 0.22 percent at NT$9.02, slower than the TAIEX’s 0.48 percent increase, Taiwan Stock Exchange data showed.

Source: Taipei Times