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Hits:Updated:2022-12-02 11:12:26【Print】
In the past two years, due to the global outbreak of the novel coronavirus, the shipping industry has entered an unprecedented boom era, and containers have become a well-earned "money-printing machine" at sea. Major shipping companies have increased their layout, and the business of buying new ships and renting second-hand ships is also very popular.
Since the summer, however, the shipping market has gone from hot to cold, and has quickly swung to the other extreme: flagging demand, mountains of empty containers and huge amounts of idle capacity that shipping companies are struggling to keep afloat.
China United Shipping Co., which is planning a stock market listing, is also in trouble and may terminate contracts with its largest supplier, Antong Holdings, to charter ships and containers.
China United Shipping said that due to the international shipping market all the way down the avalanche slump, joint operations in Europe and the United States are difficult to maintain normal operations, must be adjusted in time, as soon as possible to take measures to stop losses.
According to media reports, Chen Honghui, chairman and CEO of Zoomlion, said recently that Zoomlion has combined the two routes between the United States and Spain into one, which is expected to operate at a discount based on current market conditions, and the company will gradually try to reduce ship costs.
It is reported that Antong Holdings and China United Shipping and China United Hong Kong signed a joint foreign trade routes cooperation agreement for 34 months, originally the agreement to end on March 31, 2025. But according to the recent announcement of Antong Holdings, China United Shipping and China United Hong Kong hope to terminate the "joint foreign trade route strategic cooperation Agreement" and its charter contract, charter contract.
However, Antong has yet to reach a settlement with China United Shipping and China United Hong Kong, and the two sides are still negotiating.
Antong Holdings said that if China United Shipping and China United Hong Kong terminate the Strategic Cooperation Agreement on Joint Foreign Trade Routes in advance, the revenue and profit of foreign trade related logistics business of Antong Holdings may decrease in the future, but it will not have a significant impact on the main business -- domestic trade container logistics service. Nor will it have a material adverse impact on the company's disclosed financial position and operating results for the year 2022.
China United is a shipping company whose routes include inshore routes such as intra-Asia routes and ocean routes such as Asia-Europe routes and trans-Pacific routes. By the end of last year, Zhongunited was ranked 22nd among the world's container-shipping companies by capacity, according to Alphaliner, a shipping information firm. In February, China United Shipping applied to list on the Hong Kong Stock Exchange.
According to data released by China United Shipping, the company's revenue in 2019, 2020 and 2021 was 401 million yuan, 612 million yuan and 6.403 billion yuan respectively, and its profit was 60.5441 million yuan, 174 million yuan and 2.161 billion yuan respectively, with leap-forward growth in both revenue and profit. China United Shipping said the growth was mainly due to significant increases in shipping volume and freight rates.
China United's partner, Antong, which used to focus on domestic routes, has profited from the maritime market in recent years. In 2021, Zoomlion signed a framework cooperation agreement with Antong, under which Zoomlion leased 12 ships and containers to Antong and jointly operated trans-Pacific routes and European routes. Except rent and operating costs, the profits were divided 50-50 and losses were borne separately. The partnership expires on March 31, 2022.
Benefiting from this cooperation, Antong received a rent of 1.562 billion yuan in 2021, making a profit of 1.761 billion yuan for the whole year, and received another rent of 687 million yuan in the first quarter of 2022. According to the prospectus of Zoomlion, the total amount of payments made by Zoomlion to Antong under the Framework Agreement for the year ending December 31, 2021 accounts for approximately 20% of the total income of Antong during the year.
Zoomlion also benefited a lot. In 2021, Zoomlion Shipping gained about 1.566 billion yuan of gross profit from the cooperation between the two parties. Among the 35 ships of China United Shipping, 33 are leased, among which it is expected that 14 ships will be leased from Antong, with a total transport capacity of 53862TEU, accounting for 37.1% of the original transport capacity controlled by Antong.
In view of this win-win situation, and with shipping rates still high, the two sides signed another cooperation agreement in April 2022 and extended the cooperation period to 34 months.
Under a previously announced partnership agreement with Antong, China United leases 10 to 12 vessels to Antong for $52,000 per vessel per day, with the same 50-50 share of route profits and losses to be borne by the Chinese company. The stakes are higher for China United than in the previous deal.
Antong expects to receive no less than RMB885 million in revenue from the agreement from June 1 to December 31, 2022, and no less than RMB4.258 billion in revenue for the entire cooperation period.
But now, as the shipping market continues to fall, times are getting harder for shipping companies.
According to the latest data released by the Shanghai Shipping Exchange, the Shanghai export container freight index (SCFI) fell 76.94 points to 1229.9 points last week, down from 9.45% in the previous week to 5.89%, the 23rd consecutive week of decline, hit a 28-month low since late August 2020, and the freight rates of major routes fell across the board.
In addition, the latest world Container Freight rate Index (WCI) published by Drury has recorded 39 consecutive weeks of decline to 2404 points, down 7% in a week and 74% in a year, among which the biggest decline in the European line fell 18%, down 84% in a year, the freight rate of a big box reached 2192 dollars, hitting a two-year low since October 22, 2020.
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