Taiwan Navigation president Charlie Mei has told journalists that the company expects higher revenue and foresees that the dry bulk market will remain healthy despite the US-China trade war.
Mei was speaking at a regular review of Taiwan Navigation’s operations. He said, “Vessel supply remains under control due to low newbuilding orders in 2016, so the second half of [this] year should be better than the first half. We expect 2019 to be just as good, unless the trade war spirals out of control.”
Taiwan Navigation has been renewing its fleet, taking delivery of four new dry bulk vessels in 2017 and having sold the same number of older units since 2017.
“Our new ships are eco-friendly and are more competitive,” said Mei.
Taiwan Navigation was established in 1946 and owns about 20 bulk carriers, including two post-Panamaxes that are dedicated to shipping coal for Taipower. Besides these, Taiwan Navigation has two container ships chartered to Yang Ming Marine Transport, four product tankers chartered to compatriot refiner CPC, and a few tugs.
Originally a state-owned company, Taiwan Navigation is now publicly listed but remains majority controlled by the government.
Mei said, “The US-China trade war is the largest cause of instability in the market but unless things get out of hand, the outlook isn’t pessimistic. Shipowners must, however, maintain discipline in ordering newbuildings.
Another factor affecting vessel supply is the International Maritime Organization’s global sulphur cap, which will come into effect in 2020. The regulation restricts sulphur content in marine fuels to 0.5% from the current limit of 1%. Shipowners can choose to install scrubbers, burn low-sulphur fuel oil, or use other fuels such as liquefied natural gas.
Mei said, “Should shipowners go for scrubbers or low-sulphur fuel oil? There may not be enough capacity or suppliers to install scrubbers and it’s too costly to switch to low-sulphur fuel oil. Left with no choice, shipowners may choose slow steaming, which will also reduce the supply of ships.”
The Taiwanese government’s push towards wind energy will provide additional income streams, as the construction of wind farms necessitates transport infrastructure and vessels for wind turbines.
Taiwan Navigation has signed agreements with Singapore-based offshore support vessel owner Eastern Navigation and Danish energy company Orsted (formerly DONG Energy), which is building the Greater Changhua offshore wind farm in Taiwan. Eastern Navigation and Taiwan Navigation will work together to provide Orsted with a service operations vessel to support the project.