Evergreen Marine Corp (EMC): Make Breakthrough from Crisis

Evergreen Marine Corp (EMC): Make Breakthrough from Crisis
                      
                ——Interview with Mr. Xie Zhijian, EMC Vice President
    
　　

Container volume surplus remains the largest concern
Liner companies are still in difficulties. It is estimated that the holding capacity of newly delivered vessels in 2010 is approximately 1.62 million TEUs. If this is true, the newly increased capacity will be offset by demolishing all the vessels of over 20 years old. Container volume surplus still remains the largest concern in the shipping industry.

Journalist: It is known that EMC did not build any ships in the past year. Can you tell us how EMC is affected by the current financial crisis? 

Mr. Xie: You know, some liner companies overly estimated the situation and issue a lot of orders of new ships, including large and super-large container ships. A statistics report made by Alphaliner, a French shipping consulting agency shows that the holding capacity of the newly delivered vessels in 2010 will be 1.62 million TEU, accounting for 13% of the total holding capacities in the market. The newly increased container capacity will cause great strike to the shipping market next year. 

Generally speaking, EMC keeps healthy in this financial crisis. Other ship owners have ordered some new ships, even some large ships. Meanwhile, the cargo volume greatly shrinks due to financial crisis. It can be imagined that the liner companies have to greatly lower their freight rates to reach full loading as possible as they can so that they suffer great losses. We EMC did not order any new ships in the past year, so we did not suffer as much as our counterparts in this economy crisis.    

Journalist: As you say, the supply & demand imbalance causes “Price War” and further worsen the shipping market. What’s the current situation of EMC?
Mr. Xie: We did not order new ships and we keep our freight rate constant. In the later half part of this year, many liner companies realized that a greater loss will be caused if the “price war” continues. Therefore, they retain the empty container space so that the overall freight volume in the shipping market decreases. We EMC can almost guarantee the full load of each vessel in the past year.

Journalist: Currently many focuses are put on use and drop-out of previous vessels, what impact will the newly-delivered vessels have on the shipping market? 

Mr. Xie: There are 1965 vessels of over 25-year old in the shipping market with a total holding capacity of 920,000 TEU accounting for 7.2% of the global freight market. If all these old vessels are discarded, the newly increased vessels in 2010 will be decreased by 5%. The shipping market began to show momentum in 2002 and continued its prosperity in 2008. The continuous growth has prospected some dangers. Then in 2008 cargo volume shrank, but the container space still grows, causing supply over demand. By the end of Oct, 2009, the free container space reached 1.39 million TEU, accounting for 10/7% if the overall global container capacity.   

In the past 6 years from 2002 to 2008, the global shipping industry develops by leaps and bound. This stimulates ship owners to expand their orders of new vessels. It is estimated that there will still a great number of new vessels to be delivered in the coming three years. EMC sticks to its idea of not building new vessels, which proves to be true.

Container lines should enhance cooperation
In the situation of economy downturn, it is crucial for container liners to enhance their cooperation. This can make all parties to give full play to their own advantages to enlarge service network, port coverage and provide more flexible and convenient service for clients.

The cooperation can be in forms of exchanging container spaces and vessel consolidation. It is estimated that the global container market in 2010 is still grey. Hence, the liner companies should be united together to make win-win situation.

Journalist: China plays an important role in the world economy. Will EMC cooperate with more liner companies in China mainland in future?

Mr. Xie: We have started our cooperation with China Shipping Group in the later half of 2009. From June 16 this year, we and China shipping began to have our joint vessels from Shanghai Port, Qingdao Port and Kaoshiung Port. We specially designed several joint shipping routes to expand our service network and port coverage. We and China Shipping have signed Route Cooperation Frame Treaty to jointly launch 26 large container vessels with 190,000 TEU holding capacity from Fareast to North Europe, West America, East America and Mexico. Our principle is to make full use of the free container spaces to a great extent.

Journalist: What’s EMC’s plan for the upcoming 2010?

Mr. Xie: For next year, cargo volumes in next year will definitely increase and we will have a better situation. However, we will be more self-discipline. Our aim is to make profit rather than occupying more market shares. Therefore, we will take full loading of cargoes as priority. We will try to avoid profit loss to achieve financial balance although there is still some time for profit making.