As the fragmentation of the shipping market intensifies, why did Haifeng International (01308) hand over the “sharp rise in volume and price” questionnaire?
The fragmentation of the shipping market is intensifying. Although the SCFI Composite Index achieved eight consecutive increases before the holiday season, the trend by route had already taken various routes: the US, West, and East US freight rates fell from high levels, the European route's rise and implementation was insufficient, the main shipping contract for European route futures fell sharply in late October, Maersk's opening price fell far below the level of increase in the 45th week, and market sentiment quickly cooled down. Fluctuations in the mainline market and the relative stability of offshore routes form two aspects of the current shipping pattern.
In this context, Haifeng International (01308) handed over the report card for the third quarter of this year. For the nine months ended September 30, 2026, the company's revenue increased 14.2% year-on-year to US$2.808 billion, container traffic increased 5.9% to 2.912,200 TEU, and average freight increased 9.4% to US$825.9 per TEU. The three core indicators rose at the same time, outlining a clear “sharp rise in volume and price” curve. However, at a time when main line freight rates are fluctuating and the supply pattern in the offshore market is surging, the market can't help but ask: Can the company's growth momentum continue in the fourth quarter?
Structural economy under geopolitical disturbances
According to the Zhitong Finance App, since this year, ocean routes have been affected by factors such as Red Sea detours, the situation in the Strait of Hormuz, port congestion, and early peak season, and freight rate fluctuations have intensified; routes within the Asian region have continued to receive cargo volume support due to factors such as manufacturing shifts, deepening RCEP, release of storage demand, and hub port congestion. In this context, the global container transport market is clearly divided. Freight prices within the Asian region continued to strengthen in the third quarter. At one point, the Drury Asia container freight index reached a new all-time high, and freight rates for many routes from Shanghai to Southeast Asia rose markedly. After entering October, freight rates for some routes declined slightly, but overall they were still relatively high, reflecting that the relationship between supply and demand in the region is still tight.
Haifeng International's business focus is on this market segment. The company focuses on offshore routes in Asia. The network covers 79 major ports in mainland China, Japan, South Korea, Southeast Asia, South Asia, etc., and operates 74 routes. Compared with ocean routes, routes within the Asian region rely more on small and medium-sized ships and high-frequency port calling capabilities, and are also more susceptible to the combined effects of port efficiency, the pace of regional trade, and geographical premiums. Currently, there are many orders for large ships around the world, but the supply of small and medium-sized ships below 3,000 TEU is relatively tight. Old ships account for a relatively high proportion, and the pace of delivery of new ships is limited. This makes it not as easy to expand capacity within the region as on main lines. Therefore, the track where Haifeng International is located does not simply follow fluctuations in global freight rates, but has stronger structural support.
One of the most prominent operating characteristics of Haifeng International is its high-ownership fleet model. According to Alphaliner data, the company operates 121 ships and about 187,000 TEUs, of which 99 are owned and 22 are leased. This structure has obvious advantages in the upward freight rate cycle: when industry rents rise, high own capacity can reduce dependence on external leases and avoid rapid cost increases; when the market enters a trough, its own fleet also reduces rental expenses, making the company more resistant to the cycle.
More importantly, Haifeng's international fleet is dominated by small and medium-sized vessels below 3,000 TEU. The average age is low, the route network density is high, and the turnover efficiency is strong. The Asian region has many ports, short voyages, and scattered cargo flows. Large ships do not necessarily have the advantage of adapting, and small and medium-sized ships can more flexibly match the pace of regional trade. UBS's previous estimates showed that the company has a cost advantage of about 100 US dollars per standard box compared to the same industry, and at the same time, the average shipping fee also has a premium of about 100 US dollars compared to the same industry. This combination of “low cost+high premium” is not an explanation for short-term freight rate fluctuations, but is the result of a combination of fleet structure, route network, operational efficiency, and customer stickiness.
Freight rates outperform traffic, and our own fleet supports the cost moat
Judging from the performance, the marginal contribution of freight rates during the period was significantly greater than the volume of traffic. The Zhitong Finance App noticed that in the third quarter, single-box freight rates both increased month-on-month, and the average value for the first three quarters rose from 754.9 US dollars in the same period last year to 826 US dollars. In response, Huatai Securities attributed the main reason for rising freight rates to strong export demand compounded by geographical disturbances and extreme weather in the Middle East, leading to increased port congestion, reduced ship turnover efficiency, and tightening effective ship capacity in the market. Meanwhile, on the traffic side, the volume of 940,000 TEU in the third quarter still increased 2.2% year over year, showing resilience during the traditional off-season. The month-on-month decline was mainly affected by port congestion and reduced ship turnover efficiency due to seasonal off-season and typhoon weather. It can be seen that short-term fluctuations in traffic volume are more due to weather and seasonal disturbances than actual weakening on the demand side.
Performance on the cost side further strengthened this judgment. The cost of a single tank increased by only 0.8% year-on-year in the first half of the year, while the average price of low-sulphur marine oil in Singapore rose by 31.1% and the rent for 1,000 TEU ships rose 9.6% during the same period. The gap in cost control capacity is clear at a glance. This resilience is no accident; it is rooted in Haifeng's unique fleet structure. As mentioned above, the company's own transportation accounts for more than 87%. In the upward cycle of freight rates, a high ownership ratio means there is no need to endure the erosion of profits caused by rising rents. Huatai Securities attributed this to strong management capabilities and the scale effect brought about by increased loading rates.
However, it is important to note that the advantage of owning a fleet of ships will be transformed into an amplification effect of operating leverage when freight rates decline. According to the Zhitong Finance App, the company's new shipbuilding orders are expected to be delivered one after another from the second half of 2026 to 2029. Capacity expansion is a growth engine during the boom in demand. Once the growth rate of trade within the Asian region slows down, additional capacity will directly turn into depreciation and shipping suspension pressure. In other words, Haifeng's current profit advantage is partly based on the combination of “high freight price+controllable cost”. The sustainability of this combination determines whether profit elasticity will continue.
In addition to operating data, Haifeng's simultaneous announcement of a special dividend also sent a signal. The company will pay a special dividend of HK$1.0 per share, which will be paid on December 17, 2026, compounded by HK$1.5 per share for the interim period. A total interim and special dividend of HK$2.5 per share has been declared. Based on this, Huatai expects the annual dividend rate to reach 85%. It believes that this fully demonstrates the company's strong profit performance, abundant cash flow, and willingness to continue to repay shareholders. At a stage where new shipbuilding orders are in hand and capital expenditure is at a high level, this dividend payment not only highlights the abundance of cash flow, but also implies management's confidence in the certainty of short-term profits. However, the market's reaction to this was not entirely positive. Instead, the stock price weakened after the announcement. The signs that profit orders are being realized suggest that investors also need to consider the position of the tariff cycle between good performance and good prices.
Taken together, the “sharp rise in volume and price” report card handed over by Haifeng International in the third quarter was not simply a short-term gift based on the tariff cycle, but was the result of its deep cultivation of Asian offshore routes, a high level of its own fleet structure, and refined operation capabilities. At a time when the differentiation of the global shipping market is intensifying and trunk line freight rates are fluctuating, the company has shown operational resilience that distinguishes it from mainline carriers by leveraging the flexible adaptation of small and medium-sized ships, significant cost advantages, and customer stickiness. The distribution of special dividends and expectations for high dividends for the whole year further confirm its abundant cash flow and sincerity in returning to shareholders. Although the pace of delivery of new ships and the growth rate of regional trade still need to be tracked, Haifeng's structural card position in segmented tracks has given it greater initiative in the midst of cyclical fluctuations.