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Cosco Shipping was able to maintain freight rates for the first quarter even when container volumes fell due to the 2019 Corona virus disease (COVID-19). As one of the first shipping carriers to announce the results of the first quarter, Cosco's report shows that container shipping's ability to surpass COVID-19 quickly by adjusting supply to demand.

The group's revenue for the first quarter reached US $ 5.1 billion, up nearly 3% over the same period last year, with revenue per TEU on all routes improved from US $ 943 to US $ 949 per TEU, Cosco Shipping Holdings said. But the group's total volume fell, reaching only 5.6 million TEUs in the first quarter, down 4.67% year over year.

For Cosco Shipping, reported revenue of US $ 3.1 billion in the first quarter, an increase of 1.1%. Volume fell 6.2% to 4 million TEUs, with the majority of losses incurred on China's domestic transport routes, having fallen by 16% when the country was shut down to limit the spread of Corona virus. The carrier grew its intra-Asia volume to 1.14 million TEUs in the first quarter, an increase of nearly 2% year over year and improved revenue by 17% to $ 817 million.

 

Managing capacity successfully


Lars Jensen, CEO of Sea-Intelligence Maritime Consulting, said the group's overall production decline caused by the Corona virus pandemic was predictable, but he said the highlight in the result of Cosco Shipping is the growth of its shipping unit (TEU) revenue.

"Using the US dollar revenue data, only the trans-Pacific saw rates decline and that was by just 0.7 percent," Jensen said. "Other trades saw rate increases. Despite the large drop in intra-China volume, rates here also increased 7.6 percent."

The overall increase in revenue per unit of Cosco Shipping was 7.9% in the first quarter confirming the trend that Jensen said this can be noticed in OOCL and ONE (Ocean Network Express).

"Despite the negative impact of a virus outbreak in China and the early effects of the pandemic in late March, carriers have tried to maintain strong control over rates through freight rates." Their quick action in reducing capacity, he said. "

Data from Sea-Intelligence shows that more than 400 sailings have been blanked on long-haul routes. On Asia-Europe and trans-Pacific routes alone, weekly shipping capacity was cut in the past week from 3.1 million TEUs to 3.4 million TEUs. Analysts estimate that the total lost volume in 2020 could reach 7 million TEUs.

OOCL - a subsidiary of Cosco Shipping - Hong Kong-based reported good performance in the first quarter, total revenue increased 5.5% to US $ 1.54 billion, with a slight increase in production of 0, 4% to US $ 1.59 million. Its average revenue per TEU is $ 963, up 6%.

Alphaliner noted that the average rates of OOCL on Asia-Europe and intra-Asia routes were particularly strong, although this has been reduced on the transpacific and transatlantic routes. Analysts said the average rates was starting to come under pressure as volume was negatively affected by the Corona virus blockade in all major markets that would hurt earnings in the second quarter.

 

Phaata (Source JOC)

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