TAIWAN's container liner Yang Ming is in the greatest financial danger following the bankruptcy of Hanjin Shipping, according to Drewry Financial Research Services (DFRS), adding that the line has the industry's most leveraged balance sheet, with a net gearing of a massive 437 per cent at the end of the third quarter.

The figure is way above the industry average of 124 per cent and is nearly five times that of its closest regional peer, Evergreen, The Loadstar reported.

The report says: "Yang Ming's high debt is a great cause for concern for us, given the heightened financial risks. Even with recovery in the underlying freight market, the debt burden without a restructuring is a red flag and a clear sell signal for us."

DFRS noted that Yang Ming had accumulated NTD38.4 billion (US$1.2 billion) in losses since 2009, with its net loss for 2016 at around $400,000 by the end of the third quarter.

The analyst believes the carrier's high cost structure, combined with its debt mountain, will "keep Yang Ming in the red in 2017", despite an improved outlook for freight rates.

In November, the Yang Ming board announced it would slash executives' pay by 50 per cent and the salaries of senior line managers by 30 per cent, among a raft of desperate measures to stop the rush of red ink.

Yang Ming, founded in 1972, is a member of the CKYE east-west vessel alliance, but in April it will join with Hapag-Lloyd and the soon-to-be-merged container businesses of K Line, MOL and NYK in THE Alliance. Its dire financial health will be of great concern to the other members.

THE Alliance is the first vessel-sharing agreement to include safeguards for shippers in case of a failure by one of the partners.

According to US federal maritime commissioner William P Doyle, THE Alliance's filing with the FMC includes "framework language" to allow other members to take over the operation of the affected party to avoid a repetition of the supply chain chaos caused by the sudden collapse of Hanjin.


BIFA - Industry News

HMG Brexit announcements

Her Majesty’s Government Helpline The HMG Helpline has now gone live, the number is 0300 3301 331 . Government is encouraging forwarders to direct their customers to using this service and provide...


Defra Import and Export Newsletter: Issue 5

The last week has seen a couple of key policy updates affecting exports, which will further help you and your business get ready for 31st October. Exports: EU approve UK’s application for third...


FreightShareLab seeks freight partners

By fully optimising the freight and vehicles on the road, research indicates some serious reductions in greenhouse gas emissions from road freight could be possible. Initial trials from the...


IMO 2020 rule to leave container shipping lines with US$11b fuel bill

As a result, carriers will likely pass on the extra fuel costs to shippers. If they fail to foot the bill, the carriers are expected to cut service levels. The degree of compensation that carriers...


US-China trade war weighs heavily on air cargo

Freight capacity, measured in available freight tonne kilometers (AFTKs), rose by 2% year-on-year in August 2019. Capacity growth has now outstripped demand growth for the 16th consecutive month....


FIATA launches course to help prevent wildlife trafficking

Available free of charge, “Prevention of Wildlife Trafficking” was launched by FIATA, the International Federation of Freight Forwarders Associations, and TRAFFIC, the wildlife trade monitoring...


UK supply chains face £15bn annual freight admin cost rise from no-deal Brexit

UK supply chains face an additional £15 billion (US$18.5 billion) annual cost burden in the event of a no-deal Brexit, according to new government estimates published today that only take into...


BIMCO points to ships’ power as a means to curb emissions

BIMCO has submitted a proposal to the International Maritime Organization (IMO) to regulate propulsion power of ships in order to sustain the GHG savings already achieved through slower steaming....


AAI Group Login

Cookies are small text files downloaded to your computer each time you visit a website. When you return to websites, or you visit websites using the same cookies, they accept these cookies and therefore your computer or mobile device.