Orient Overseas (International) Limited (OOIL), the Hong Kong-listed parent of container line OOCL, announced a loss for 2016 of US$219.2 million compared to a profit of $283.9 million in 2015, as it navigated an operating environment it said was “extremely challenging.”
“This past year has seen some of the most difficult markets in our industry’s history. A combination of steady but low growth in most regions and an overhang of excess supply built up in recent years led to extremely challenging conditions in many trade lanes for most of 2016,” OOIL chairman C C Tung said.
Revenue also dropped 9.9% to $5.298 billion for the full-year 2016 even as OOCL’s liftings went up 9.1% to 6.1 million TEUs, with load factor improving to 85% from 82%.
Tung said freight rates in 2016 “frequently sank below the levels seen in 2009” even as the industry had to cope with rising fuel prices in the second half of the year.
He added that the financial results reported by the industry as a whole bear out just how severe conditions became. “A quarter-by-quarter or half-by-half analysis of industry results since the middle of 2015 paints a picture of strengthening headwinds,” said Tung.
At the start of next month, OOCL will join Cosco, CMA CGM, and Evergreen in a new container grouping called the Ocean Alliance, which Tung said is key to seeing through the tricky trading condition for the liner sector.
“In these turbulent times, with industry consolidation occurring at a pace that few, if any, had expected, OOCL continues to build its future on the twin pillars of alliance membership and the efficient operation of the most appropriate vessels for each trade lane,” continued Tung.
In 2016, the group did not take delivery of, or place any orders for, any further newbuildings. However, it will start to take delivery of its six 20,000-TEU class newbuilding vessels from May 2017.
Tung said the group’s investment in these vessels will allow it to gain economies of scale in all major East-West trades.
“At the same time, we will maintain our focus on continuous cost improvement and further efficiency gains. We continue to invest in IT, as a means of improving not only our internal processes, but also our customer interaction and engagement,” said Tung.