HMM and Evergreen Q3: HMM doubles the forecast, built on lost capacity
HMM just doubled the forecast. The ships to undo it are already on order
HMM, South Korea’s biggest container line, reported Q3 2026 operating profit of ₩1.39trn on 12 November. That is up 370% year on year, according to Newsway. Revenue rose 52% to ₩4.13trn and net profit rose 405% to ₩1.54trn. The operating margin was 34%. Put simply, HMM kept about a third of every won it billed as operating profit.
On the same day Taiwan’s Evergreen Marine reported Q3 net profit of TWD 46.62bn, up 114.36%, on revenue of TWD 146.78bn, up 51.44%. Its net margin was 31.76%, Liberty Times Net reports.
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Both numbers are huge. Our view is that they describe a market that has already started to turn, and forwarders should treat them as a high-water mark, not a new baseline.
How far they beat
The size of the surprise matters. Before the results, analysts expected much less.
In October, Financial News cited a consensus from data provider FnGuide of ₩686.5bn in Q3 operating profit for HMM. The actual figure was about twice that. The more bullish brokers also undershot. Shinhan Securities forecast ₩1.0042trn and LS Securities ₩1.0158trn, the Seoul Economic Daily reported on 14 October. HMM beat both by more than a third. NH Investment & Securities had pencilled in ₩939.5bn (Financial News, 5 October).
HMM’s margin also tops its peers. Newsway puts Q3 operating margins at 28.7% for COSCO, 21.6% for ONE and 20.6% for Maersk’s ocean business.
Evergreen tells the same story in a different currency. Its Q3 earnings per share (EPS, profit divided by the number of shares) was TWD 21.53, the highest in eight quarters. Its nine-month EPS of TWD 32.77 already beats the TWD 31.68 it earned in all of 2025 (Liberty Times Net).
The other point is how much of the year sits in one quarter. HMM’s nine-month operating profit was ₩2.02trn, up 76%, so Q3 alone made about 69% of it. Evergreen’s Q3 EPS was about two-thirds of its nine-month total. Evergreen’s nine-month revenue was up only 15.36%, against 51.44% for Q3 alone. The first half was ordinary. The third quarter was not.
Why they earned it: less space, not much more cargo
In our view, these are scarcity profits. Carriers made more money because there was less usable capacity, not because there was much more cargo.
Evergreen says as much. It credited demand that carried over from Q2 and kept Q3 in peak-season conditions all quarter. But it also pointed to geopolitics and congestion at major global hub ports, which reduced effective shipping capacity. The result, it said, was tight supply and demand that supported revenue and profit (Liberty Times Net).
NH’s Jeong Yeon-seung went further before the results. He listed the causes in a 4 October note: the Strait of Hormuz blocked by the US-Iran war, drought cutting Panama Canal traffic, and typhoons worsening congestion at Chinese ports. “We believe the effect of reduced supply is having a greater impact than increased demand,” he said. He expected HMM’s operating profit to peak in Q3 and then trend down (Financial News).
The spot market backs this up. The Shanghai Containerized Freight Index (SCFI), a weekly benchmark of spot rates out of China, averaged 3,407 points in Q3. That was up 130% year on year, the Seoul Economic Daily reported. But by the end of September the SCFI was 3,662.30 and had fallen for a second week, after eight weekly gains (Financial News, 12 October).
There is a delay between spot rates and carrier results. Contract rates adjust slowly, and cargo booked at high rates is counted when it ships. Financial News gave an example. In Q2 the SCFI rose 55% quarter on quarter, but HMM’s dollar freight revenue rose only 16%. An industry official told the paper that “cargo secured earlier at higher rates can support second-half earnings.”
That works in both directions. Q3 results caught the rate spike late. Q4 and Q1 results will catch the decline late. When a carrier reports in November, it is showing you the market of August.
The ships coming the other way
Scarcity profits end when scarcity ends. Two things could end it. First, disrupted routes reopen. Second, new ships arrive.
On the first, NH expected Red Sea traffic to rise as the off-season starts and geopolitical risk eases. The Seoul Economic Daily listed a return to the Suez Canal as a risk that could push rates lower. Every ship that stops sailing the long way round Africa frees up capacity overnight.
On the second, the order pipeline is already large. “The global container ship order backlog exceeds 40% of the existing fleet, so supply pressure will persist through 2029,” LS Securities analyst Lee Jae-hyuk said (Seoul Economic Daily). NH listed recent orders: 26 ships of 18,600 TEU (twenty-foot equivalent units, the standard box measure) for Maersk, 12 ships of about 22,000 TEU for COSCO, and six 13,600 TEU ships for Yang Ming from Hanwha Ocean. Those are due in 2029–2030. “Any additional orders would prolong downward pressure on freight rates caused by increased supply,” Jeong said (Financial News).
HMM is adding to that. With its results it set out ₩29trn of investment by 2030, including ₩6trn in 2026, and a target of 166 container ships and 110 bulk ships (Newsway). It is already moving into bulk. Its bulk fleet is 60 ships, up from 44 at the end of Q1 2025, with 22 more on order. Bulk made ₩378.4bn of operating profit in the first nine months, up 418.5%, and its share of group operating profit rose from 6.4% to 18.8%. A carrier that expects box rates to hold forever does not spread its bets this way.
HMM also replaced its dividend benchmark with a payout ratio of at least 30% of profit (Newsway). That means its payouts will now move with profit, which suits a company that expects profit to swing.
Even a bullish broker’s numbers point down. Shinhan raised its 2027 HMM operating profit forecast to ₩1.813trn (Seoul Economic Daily). That was a big increase. But it is still below the ₩2.02trn HMM has already made in the first nine months of 2026.
What it means for forwarders
Forwarders sit between carriers and shippers. When carrier profits look like this, three things tend to follow.
First, carriers have little reason to give ground in Q4. Evergreen’s outlook stresses flexible operations, network optimisation and managing its cargo mix. It also says it will use its fleet and container assets as efficiently as possible (Liberty Times Net). In our reading, that means blank sailings (cancelled voyages that take capacity out) and choosing higher-paying cargo, not cutting rates to fill ships. Expect firm talk and GRIs (general rate increases) announced for December, even if spot rates keep falling.
Second, do not price 2027 contracts off Q3. Carriers will open annual talks with these results fresh in the market. But the results describe the cost of space in late summer, not in spring. Our view is that forwarders should push for shorter terms, index-linked clauses that track the SCFI or a similar benchmark, and volume flexibility. Do not lock in a high fixed rate for 12 months.
Third, watch the routes, not the earnings. The biggest swing factor is whether ships go back through the Red Sea and Suez, and whether Hormuz and the Panama Canal ease. Any of these would put capacity back on the water faster than a shipyard can. On the transpacific (Asia to North America) and Asia–Europe lanes, a reopening would hit rates within weeks, while carrier results would show it only months later.
For shippers, the advice is simple. If a forwarder quotes you a 2027 rate anchored to today’s carrier margins, ask what happens to that rate if the SCFI falls by a third.
Our call
These results make us more confident that Q3 2026 was the top, not less. HMM beat the consensus by about double. Evergreen credits lost capacity, not more cargo, and NH said the same of HMM before the results. The spot index was already falling in September. Shinhan, which raised its 2027 forecast, still expects HMM to earn less in all of 2027 than in the first nine months of 2026.
Our prediction: Yang Ming’s November revenue, filed by 10 December, will come in below October’s TWD 21.04bn. Its Q4 2026 profit, due with full-year results in the first half of 2027, will come in below Q3’s TWD 18.57bn. If both happen, Q3 2026 will stand as the peak quarter of this cycle for Taiwan’s long-haul carriers. Forwarders who priced 2027 off it will have overpaid.
Sources
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