Home » Breaking News, Maritime » MISC quits container shipping after $789-M loss

MISC Bhd has announced its departure from the container shipping business after massive financial setbacks due to deteriorating industry conditions.

The Malaysia-based shipping company and Asia’s largest shipping line by market value said that it had lost US$789 million in the container vessel business over the past three years.

The operator’s departure highlights the fast-deteriorating conditions in the boxship business. In early 2010, MISC revamped its liner business by pulling out of the slowing Asia-Europe trades and focusing on the growing intra-Asia market.

But with rates diving and capacity shooting up even in the intra-Asia trade lanes, the company has decided to leave the container shipping trade altogether and focus on its core businesses, including energy transport.

MISC said its decision to go was prompted by “the rapid pace at which the industry is changing, led by the push for new investments into even larger vessels in order to maximise economies of scale and to realise greater cost efficiency.”

This is said to be a direct reference to the launch of bigger ships by competitors on the Asia-Europe trade lanes, which began earlier this year.

This trend, MISC said, “comes at a time when the industry is being plagued by overcapacity and operators are struggling to stay profitable.”

The company plans to exit the liner trade by June 30, 2012, which will entail selling its ships, getting out of trade alliances and service contracts, and sustaining a one-off cost of about $400 million this year.

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