Evergreen Shipping: Fuel costs are the biggest challenge of the year

  • Date: Mar 13, 2019
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There are many uncertainties in the global shipping market this year. The fuel cost brought about by the sulfur emission regulations that will come into effect from next year will be the biggest challenge for the shipping industry this year.

Zhang Zhengyu, Chairman of Evergreen Marine, said recently that the shipping industry is full of challenges and opportunities in 2019. The biggest challenge is fuel cost, which accounts for 20% of the cost. Although this year’s oil price is lower than last year, the implementation of low-sulfur oil will be implemented next year, which is a big challenge for Evergreen Shipping.

Zhang Zhengxuan pointed out that the ports along the coast of the mainland even took the lead in implementing the regulations on low-sulfur oil from the New Year’s Day this year. However, the spread between its high-sulfur and low-sulfur oils ranges from $200 to $300 per metric ton, with a difference of up to 50%. For Evergreen Marine, low-sulfur oil is the future challenge, and Evergreen Marine will install an exhaust gas scrubber to minimize variables and costs.

Li Mengjie, general manager of Evergreen Marine, analyzed that the current high sulfur oil is 400 US dollars per ton, but the low sulfur oil is 600 US dollars to 700 US dollars per ton. The International Maritime Organization will announce the low sulfur oil specifications in May. The specifications have not yet been determined. Although the exhaust gas scrubber will be installed in the sea, the exhaust gas scrubber needs to spend money to queue up for purchase and also queue up for installation in the dock. It takes one or two years before and after, plus the time and capacity loss of the ship is a huge expense. .

Zhang Zhengxuan mentioned another uncertainty, including a slowdown in economic growth this year, uncertainty about the future of investors and consumers, and a stronger wait-and-see attitude. Overall, the demand for space will be slightly greater than supply, but the imbalance between supply and demand has existed since 2011, but this year and next year is only a balanced development of supply and demand, but does not mean that this year will be balanced.

Evergreen Marine also put forward its own views on the lower oil price. It believes that after the oil price is lower, it will have a positive impact on the cost reduction of Evergreen Shipping. The oil price will have a plus effect on the operation side this year.

Zhang Zhengxuan pointed out that no matter how the market changes, the demand for container ship market still exists. The focus of this year is still on the change of supply. This year, it is expected to benefit from the balance of supply, and the operation of the container market will become more and more healthy; plus the market. Old ships are also facing elimination, which helps the market supply to decrease; the future large-scale ship is also facing a new test.

Zhang Zhengxuan stressed that this year’s favorable factor for Evergreen Shipping is the increase in new capacity, including 11 20,000 TEU container ships delivered at the end of this year, and 7 ships have been delivered; another 2900TEU container ships have been delivered, and will be delivered before the end of this year. 4 ships; 20 12,000 TEU container ships will be delivered next year and delivered within 2 years.

It is understood that Evergreen Marine has ordered 38 1900TEU to 2500TEU regional container ships last year. It is expected to be delivered in the next two to three years. Since the old 5000TEU container ship is more fuel-efficient than the 12000TEU container ship, this means that Evergreen will meet in the future. Eliminate 5000TEU to 8000TEU container ship.

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