HONG KONG: Orient Overseas Container Line reported falling volumes and revenue in the first quarter with the trans-Pacific and intra-Asia trades placing a drag on the carrier’s performance.
The Hong Kong-listed line reported total container volumes falling 2.5 percent from January through March year-over-year to 1.31 million TEUs. Total revenue decreased by 3.2 percent to $1.34 billion, the carrier announced in a filing to the Hong Kong Exchange.
No profit and loss figures are released its OOCL’s operational updates, but the tough operating environment can be seen from the lifting and revenue data supplied by the line.
The largest trade segment is intra-Asia/Australasia where OOCL carried 699,023 TEUs, 23,000 fewer 20-foot containers than during the same period last year, or a drop of 3.3 percent. Revenue from those boxes declined 4.4 percent to $471,854,000.
The second-largest business area in container terms is the trans-Pacific, and the carrier handled 291,424 TEUs, a significant drop of 5.5 percent. That pulled revenue down by 2.8 percent to $458,000,000.
However, the biggest surprise was reserved for the Asia-Europe trade, where total containers carried during the first quarter were 6 percent more year-over-year. Dismal rates dragged down revenue but the Asia-Europe revenue still managed to record a drop of just 1.9 percent.
The overall load factor achieved by OOCL in the first quarter rose by a marginal 0.7 percent, and revenue per TEU fell by the same amount, compared to the first quarter of last year.
OOCL is one of the few carriers that has remained in profitable territory in the past few years and Tung Chee Chen, chairman of OOCL parent Orient Overseas International Ltd., said in Singapore this week that it was partly due to the line’s strong focus on managing operating costs and boosting efficiency.
“If you want to make a profit, you have to rely on efficient operations,” he said. “If you can build a profit margin advantage compared to the industry average of 3-4 percent, and if your line can do better than that, you will be safe. And when the market falls, the industry will collectively (by individual choice, he hastened to add) raise the freight rates. In the good times you make a lot of profit, and in the bad times you can survive.”
OOCL said last month it is spending $952 million on six 20,000 TEU-ships that will be constructed by Samsung Heavy Industries at a cost of $159 million each, and 70 percent of the purchase price would be sourced from bank financing.
Fellow G6 Alliance member MOL has also placed an order for six of the mega-vessels that will enable the alliance to deploy a string of 20,000-TEU ships in the Asia-Europe trade by 2017, allowing it to compete on a level footing with market leaders and 2M Alliance members Maersk and Mediterranean Shipping Co., and the Ocean Three Alliance lines of of CMA CGM, UASC and CSCL.
