The setback, following a profit of $116.5 million for the same period in 2012, was attributed by the Hong Kong-based company to a slow volume growth and a competitive freight rate environment.
“The global economy continued to be uncertain during the first half of 2013, and the container transportation industry faced the challenges of weak cargo growth, capacity oversupply, and high bunker costs,” said OOIL chairman CC Tung.
OOCL’s total liftings for the first half of 2013 were down 1.5 percent from the corresponding period last year. Average freight revenue per 20-foot-equivalent unit was US$1,088, a decrease of 2.2 percent from the 2012 first-half average of $1,112 per TEU.
“The operating environment in the first half of 2013 was characterized by the deterioration of freight rates from the last quarter of 2012, especially on the Asia-Europe trade, and the extremely competitive freight rates recorded in both the trans-Pacific trade and the Intra-Asia trade,” added Tung. “A series of rate increases during the second quarter in the market on the East West trades generally could not be sustained.”
He said market growth across major trades grew by only about 2.2 percent during the first half of 2013. “While the markets expect a more robust second half, the industry is still expecting a full year newbuilding supply increase of 10 percent in TEU terms or 270 new ships in 2013. These factors culminated in a disappointing first half for the group.”
On the industry’s outlook, he pointed to the difficulties ahead due to the slowdown of the Chinese economy, the ongoing economic restructuring in Europe, and the uncertain recovery of the U.S. and Japanese economies, as well as the impact of a 21 percent growth in capacity between now and 2015.
“We therefore expect margins to remain thin and volatile, and that the situation will not improve substantially until fundamental supply and demand reaches a better balance.”
He said that against this scenario, the company will focus on differentiation and segmentation, better cost efficiency, and forging alliances to stay competitive.
The carrier is not stopping on investments in tonnage. During the first half of 2013, the group took delivery of two 8,888-TEU vessels out of six and five 13,200-TEU vessels out of 10.
The remaining four 8,888-TEU vessels will be delivered in 2014 and 2015, while the remaining five 13,200-TEU vessels are set for delivery in the second half of 2013 and 2014.
“We expect enhanced competitiveness in the trades where all these vessels are deployed,” said Tung.
Meanwhile, effective September 1, OOCL announced it will impose a freight rate hike of $500 per TEU for westbound traffic from the Far East (excluding Japan) to North Europe, the Mediterranean and Black Sea.