Wan Hai lifts net income, expands
Wan Hai Lines, Taiwan's highly profitable intra-Asia and east/west container carrier, increased its net income 24 percent last year, to NT$4.4 billion ($130 million), from NT$3.4 billion in 2002, as it continues to expand its activities outside its core intra-Asia trade.
Wan Hai reported a more pronounced improvement in its operating income, which soared 51 percent last year, to NT$4.6 billion ($134 million), from NT$3 billion in 2002. The carrier reported a loss on the sale of short-term investments and a higher tax expense, both of which had a negative impact on its net profit.
Nevertheless, before non-operating items, Wan Hai’s latest annual operating margin of 11.9 percent of revenue was high by industry standards, confirming that the Taiwanese shipping line has remained one of the most profitable companies in the container shipping business in terms of margins.
Jason Lee, chief executive officer of Wan Hai, said that average intra-Asia freight rates were 9 to 10 percent higher in 2003 than in the previous year.
“We expanded our capacity on the transpacific; this also contributed to the net income,” he told American Shipper.
Last year, Wan Hai upgraded the tonnage of its existing “China Trans-Pacific Service” by employing ships of about 2,700-TEU capacity. For the transpacific trade, the carrier also ordered five 4,250-TEU containerships that are due to be delivered in 2005 and 2006.
The Taiwanese carrier will launch a second transpacific service in June in partnership with CMA CGM and Norasia, and will start today its first Asia/Europe container service from Shanghai, marking its entry in the trade.
Wan Hai’s revenue increased 21 percent in 2003, to NT$38.1 billion ($1.1 billion), and its carryings rose to 2.15 million TEUs, from about 1.9 million TEUs in 2002.
“This year will continue to be better, although there will be a shortage of container (equipment) supply.” Lee said, commenting on prospects for 2004. “That will nurture rate increases in intra-Asia and the transpacific,” he predicted.
Lee likened the expected shortage of boxes, due to insufficient steel supply in Asia, to the gridlock caused by the U.S. West Coast port lockout of 2002. The shortage of containers, like the port labor disruptions, will result in reducing the availability of empty containers in Asia, he said.