Matson’s earnings for the second quarter came in more than double than they were a year ago, thanks in great part to robust demand for the container ship owner’s swift China Service.
The Matt Cox-led owner of 15 container ships posted $381m in profit for the second quarter, compared to $163m earned during the same period in 2021. Revenue totalled $1.26bn, up from $875m a year earlier.
“Within ocean transportation, our China service continued to see significant demand for its expedited ocean services as volume for e-commerce, garments and other goods remained elevated,” chief executive Matt Cox said in a statement.
“Currently in the transpacific trade lane, we are seeing solid demand for our China service as China’s factory production continues to recover from the Covid-19-related supply chain challenges.”
The company also issued a shareholder dividend of $0.31 per share for the quarter.
He said he expects transpacific freight rates to come off highs seen earlier in the year, but he is also confident that Matson’s China California Express (CCX) service between China and the US will earn high rates because it can move cargo quickly.
This service moved 48,700 feu of containerised cargo across the Pacific Ocean in the second quarter, beating year-over-year volume by 11.7% due to adding four more voyages from China to the US.
Volume for Matson’s Alaska-Asia Express delivery service from the US to Asia also improved by 12.2% to 22,100 feu in the second quarter, thanks to summer tourism boosting demand for retail goods.
“In the near-term, we expect the Alaska economy to benefit from the resumption of summer tourism and increased energy-related exploration and production activity as a result of elevated oil prices,” Cox said.
But Matson’s delivery service from the US to Hawaii — its second busiest route by volume — and the US to Guam trade did not fare as well due to lower retail demand caused by high inflation and higher interest rates, Matson said.
The Hawaii service’s second-quarter container volume slipped 1.5% from a year ago to 39,200 feu, while the Guam service’s volume fell 7% from a year earlier to 5,300 feu.
“There are negative trends from a combination of economic effects that create uncertainty in the economic growth trajectory,” Cox said.
The Alaska service may also face these same headwinds after the summer tourist season ends, he added.
Matson’s joint venture with SSA Terminals brought in $24.7m in revenue for the second quarter, up $11.9m from the same period last year.
Its logistics segment earned $23.1m in operating income in the same three months, improving substantially upon $12.9m in operating income brought in a year earlier.
“The increase was due primarily to higher contributions from all services as we continued to see favourable supply and demand fundamentals in our core markets,” Matson said.
Matson reported a $720m profit for the first half of 2022, nearly tripling last year’s result of $250m. Revenue improved to $1.99bn from $1.24bn, mostly due to the robust CCX service.
