Taewoong Logics Smiles at Rising Sea Freight Rates... Optimism for Q2 Increases

[Asia Economy Reporter Jang Hyowon] As global maritime freight rates remain strong, Taewoong Logistics, a petrochemical product transportation company, has recorded strong performance. The freight rate strength is expected to continue for the time being, so Taewoong Logistics is also expected to grow in the second quarter.

According to the Financial Supervisory Service's electronic disclosure on the 19th, Taewoong Logistics posted consolidated sales of 150.2 billion KRW, operating profit of 10.5 billion KRW, and net profit of 8.8 billion KRW in the first quarter. These figures represent increases of 103.96%, 207.58%, and 88.81%, respectively, compared to the same period last year.

Taewoong Logistics is a third-party logistics company that has grown by focusing on maritime transportation of petrochemical products. A third-party logistics company operates logistics business independently without a parent company. Its major clients include large corporations such as Lotte Chemical and Kumho Petrochemical.

Regardless of the petrochemical product price market conditions, cargo volume has been steadily increasing every year. In particular, Taewoong Logistics has maintained continuous business relationships with large corporations for the past 20 years based on stable shippers, secured vessel space, and freight rate competitiveness. As of the end of last year, Taewoong Logistics' sales composition by business division was divided into international logistics 67%, CIS logistics 14%, project logistics 9%, and others 10%.

The increase in first-quarter sales was due to the rise in international logistics sales, which benefited from the sharp increase in maritime freight rates. In the fourth quarter of last year, international freight rates rose too quickly to be reflected in transportation contracts, but from this year, the increase in freight rates can be passed on to shippers, improving profitability as well.

Minhee Lee, a researcher at IBK Investment & Securities, said, “Considering the global economic recovery and the shortage of vessel space, the strong freight rates are expected to continue for the time being, so Taewoong Logistics' second-quarter performance is also expected to improve further.” She added, “Even assuming a freight rate downturn in the second half of the year, international logistics sales are expected to nearly double this year.”

She continued, “Project logistics sales are also expected to grow by 30% compared to the same period last year due to the recovery of the EPC market.” Accordingly, she added, “Taewoong Logistics' consolidated sales and operating profit this year are expected to grow by 76% and 139%, respectively, compared to the same period last year.”