U Ming Marine Transport: Pioneering Green and Sustainable Fleet Expansion Plan with Insight for Another Stimulating Future
U-Ming Marine Transport Corporation today declared a full year cash dividend of NT$3.00 per share based on its strong financial results for 2021.
Speaking at the company’s 2022 Annual Meeting of Shareholders (AGM) in Taipei today (June 8, 2022), U Ming Chairman Mr. Douglas Hsu said the dividend maintained the record of the company for high surplus payouts and high dividend yields.
In March this year, U Ming announced that it had consolidated annual revenue of NT$14.012 billion with after-tax profit of NT$4.892 billion and earnings per share (EPS) of NT$5.79. for 2021.
U-Ming continues to demonstrate its strong financial structure with a total of NT$12.155 billion and NT$14.38 per share of retained earnings and statutory reserves available for future distribution. U-Ming will continue its efforts to reward shareholders with strong performance.
B. Overview of the maritime transport market
In his address to the meeting, Mr. Hsu said that the effectiveness of anti-Covid19 measures in various countries has resulted in pent-up demand which has favored the dry bulk shipping market.
This was coupled by the stimulus policies of the respective governments in favor of infrastructure expansion, which pushed the Baltic Dry Index (BDI) to an annual high of 5650 points on October 7, 2021; reaching a 13-year high with an annual average of 2,943 points, a year-over-year increase of 176% from 2020.
During the first five months of 2022, many uncertain factors affected the demand for dry bulk transport. In February, due to policies related to China’s Winter Olympics, steel mills in the Tangshan region reduced their steel production and consequently their iron ore imports.
Additionally, continued heavy rains in Brazil affected its main iron ore mining production; resulting in an overall bearish market sentiment for the Cape-size sector in the first quarter of 2022.
The outbreak of the Russian-Ukrainian war in late February also severely affected the export of major dry bulk cargoes like coal and grain in the Black Sea region. In April 2022, the International Monetary Fund (IMF) revised down its expected global economic growth rate (GDP) in January from 4.4% to 3.6%.
Since March 2022, major cities in China have experienced lockdowns due to the impact of COVID; The Chinese economy at 1H 2022 should be severely affected. However, we believe that once the pandemic is brought under control and the easing of COVID restrictions in China begins, as we saw in Shanghai and Beijing in early June, the Chinese government is determined to activate its aggressive stimulus policy in 2H 2022 in order to achieve a GDP growth target of 5.5% set for 2022. We believe this should support steel demand and raw material imports in the coming months.
Increased electricity demand in India due to high temperature has depleted the country’s coal stocks, necessitating substantial imports into the country. As a result, the Cape-Size freight market benefited and a substantial improvement was seen in the second quarter of 2022; as well as the still strong market sentiment for small and medium bulk carriers.
As the Russian-Ukrainian war continues, the industry is seeing an increase in ton-miles on trade routes. We are seeing more volumes over longer distances, which is helping to drive up freight rates. In the interest of food security, many countries are looking for alternative sources; which led to an increase in maritime trade.
On the ship supply side, global shipyard capacity is currently full until 2025 with a large number of new construction orders, mainly for gas carriers and container ships.
Orders for dry bulk carriers represent only 6.6% of the existing fleet, a historic low; therefore, the delivery of new dry bulk carriers over the next 2-3 years is expected to be minimal. Uncertainty related to emissions regulations and industry decarbonization technologies will also continue to hamper orders.
High oil prices, which have led to slow shipping and continued port congestion, are expected to continue to aggravate the reduced tonnage capacity situation. The Energy Efficiency Existing Ship Index (EEXI) and Carbon Intensity Indicator (CII) regulations will come into force in January 2023; As a result, ships that do not meet the emission standards will have to perform engine power limitation (EPL) or be forced into slow sailing. This will further accelerate the dismantling of older ships, which is good for general market fundamentals.
Hsu said U Ming is optimistic that the overall dry bulk cargo market should remain healthy for the rest of the year.
C. Seize the opportunity to expand the energy-efficient fleet
U-Ming continued its timely fleet renewal program. At the end of 2020, before the rebound in the dry bulk market and the surge in newbuilding prices, U-Ming had forecast that the demand for dry bulk shipping would continue to grow and compounded by the limited future growth in the supply of vessels from dry bulk. . Therefore, the company seized the opportunity to order 12 new energy efficient and environmentally friendly bulk carriers and 1 cement carrier – incurred a total capital expenditure of $650 million, but with at least 20% total savings compared to the current market. the price.
These new vessels are expected to be delivered gradually before 2024, which will boost U-Ming’s financial performance and propel the company to new successes to meet the ever-changing global economic market conditions.
U-Ming is the first and only shipping company in Taiwan to build LNG dual-fuel bulk carriers; and one of the pioneers of the global LNG bulk carrier fleet. The Company has set a target of reducing carbon dioxide emissions by 30% by 2025 (based on the 2013 baseline) and is committed to providing sustainable, low-carbon, green transportation services in the future. carbon to its customers.
To stand out from the competition, U-Ming is determined to constantly transform and modernize in order to respond quickly to market changes and challenges; supported by the clear strategic direction of growth from prudent management. The Company will continue to work with key customers to expand its low-carbon energy fleet, such as LNG/Ammonia/Methanol, in line with Taiwan’s energy transition and security policies; including the formation of a national LNG-fueled fleet, one of U-Ming’s main goals in its ongoing sustainability initiatives.
D. Continuous digital transformation
In December 2021, U-Ming’s proprietary “Fleet Safety Management System” (FSM) was verified by ClassNK, a Japanese classification society, and obtained the innovation approval certificate. The FSM system collects vessel information in near real-time to centrally capture navigational information, key equipment safety status, and engine performance data for each vessel in the operations center of the company (OP Center). The FSM is also used to ensure that each vessel adopts the best route planning, reduces the impact of fuel consumption and bad weather; which contributes to improving overall operational performance.
In addition, U-Ming is the first Taiwanese company (excluding banks) to join the Society for Worldwide Interbank Financial Telecommunication (SWIFT) in early 2022. Through the SWIFT financial platform, it integrates and transmits information from fund transfer to banks around the world to achieve efficient funds transfer and automation goals.
E. Sustainability-indexed lending and ESG sustainable management
U-Ming’s longstanding commitment to sustainable management has been recognized both nationally and internationally. In 2021, U-Ming was awarded the Taiwan Corporate Sustainability Awards Gold Award for Transportation Industry by Taiwan Sustainable Energy Research Foundation. It is also included in the stocks of the FTSE4Good Emerging Index and the Taiwan Sustainability Index FTSE4Good TIP Taiwan ESG Index. U-Ming has created a friendly working environment, obtained the Health Promotion Administration Accredited Healthy Workplace Badge, and won the “Asia Best Companies to Work for in Asia 2021” HR Award. and “We Care Best Employee Care Award”. In March 2021, U-Ming had signed a ‘Sustainability Indexed Loan Facility’ with E.Sun Bank, then with Overseas-Chinese Banking Corporation, ANZ Bank and Mizuho Bank respectively to expand the company’s green energy fleet . U-Ming’s ongoing sustainable initiatives have also attracted outside attention; the Company was recently invited to participate in an exclusive interview with the Discovery Channel show titled “Looking at the Future from Taiwan: ESG Sustainable Development”.
U-Ming currently owns and operates a fleet of Capesize, Panamax, Post Panamax, Supramax and Ultramax bulk carriers; cement transporters; Very Large Crude Carriers (VLCC); very large ore carriers (VLOC) and crew transfer vessels (CTV); totaling 71 vessels, including vessels in operation, under construction, joint ventures and vessel management services; with a total deadweight of 8.7 million tons. The average age of the owned bulk carrier fleet is approximately 6.5 years. U-Ming has overseas subsidiaries in Singapore, Hong Kong and Xiamen China.