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Thursday, July 09, 2009

Taiwan's Evergreen to dismantle a sixth of its fleet

Thursday, 09 July 2009

Taiwan's Evergreen Marine the world's fourth-largest container line, on Wednesday said it will dismantle a sixth of its fleet over the next four years as it sees no clear signs of an economic recovery. Evergreen, which recorded a loss in the first quarter as a result of the economic crisis, plans to take down 31 old cargo ships after they are retired and to sell off the scrap metal, a company official told Reuters. It owns about 180 vessels. "The shipping industry is facing severe challenges because of the global financial crisis," said the official, who declined to be identified because he was not authorised to speak to the media."Our chairman said this year would be the most difficult year for the industry because there is an oversupply of ships since the crisis struck. Basically, companies constructed too many ships in 2007 and 2008," he said.
Analysts and company officials said it was difficult to put a value figure on what Evergreen's old ships were worth, because of swings in scrap metal prices. Evergreen shares were down 3.09 percent in early trade, weaker than the main TAIEX index's  1.3 percent fall.
In April, Evergreen reported that it swung to a steep loss in the first quarter due to falling freight prices and lower volumes as the global economy suffered from its worst downturn since the Great Depression.
Analysts expect the company to continue to operate in the red in the second quarter after posting a loss of T$2.738 billion ($83 million) for the first three months of the year, as long-haul routes suffered a steep decline in demand.

Source: Reuters