Neptune Orient Lines (NOL) continued its losing streak for the third consecutive year but reduced its losses in 2014 on the back of cost-saving and efficiency-improvement measures for its box liner business as well as the strong growth of its logistics operations.
In an official release, NOL said it registered fourth-quarter 2014 core EBIT (earnings before interest, taxes and non-recurring items) loss of US$17 million, a year-on-year reduction of 79%. For the full year, the core EBIT loss reached $76 million and net loss amounted to $260 million.
Group core EBITDA (earnings before interest, taxes, depreciation, and amortization) in the quarter also improved, bringing it to $92 million compared to $7 million in the same period last year. Singapore-based NOL attributed this to its “continuous focus on operational efficiency and rigorous cost management.” The group recorded $430 million worth of cost savings in 2014.
“In spite of challenging conditions, especially on the US West Coast, our container shipping arm reduced its operating losses, delivering a year-on-year improvement in Core EBITDA, reflecting the progress made in its cost and efficiency drive. At the same time, our logistics business continued to grow, expanding its capability and presence in key growth markets,” said NOL Group CEO Ng Yat Chung.
“While we are seeing some benefits from the current trend of lower bunker prices, the longer term impact of the drop in fuel price on container freight rates is uncertain. More port congestion, resulting from further deterioration in the labour situation on the US West Coast, is a potential risk factor.”
APL, NOL’s container shipping business, narrowed its year-on-year core EBIT loss by 64% to US$37 million in the fourth quarter, attributing it to its efforts to manage costs and increase operational efficiencies.
APL cut back its fleet capacity and enhanced cargo selection to improve its operating performance. Volume fell 8% in the quarter over the prior year as a result of capacity management and fewer sailings in the trans-Pacific services calling Southern California as the U.S. port congestion continued. Fourth-quarter revenue dropped 7% to $1.8 billion compared to the same period last year.
“Southern California port congestion arising from trucker shortage and chassis issues, among others, negatively impacted both our cost and service levels in the second and third quarters of 2014. Congestion on the US West Coast due to ongoing labour negotiation hampered our operational ability in the fourth quarter,” said APL president Kenneth Glenn. “Despite the difficulties, APL performed better year-on-year due to stringent cost management and operational efficiency.”
He said they will maintain their focus on reducing costs, leveraging network efficiencies, and concentrating on yield management in key trade routes. In addition, 19 chartered ships are scheduled for expiry in 2015, and “this will further enhance our cost structure,” he continued.
In 2014, APL’s headhaul utilization went up to 94% from 91% in 2013. APL expanded its cooperation with G6 Alliance partners into the North America West Coast and trans-Atlantic trade lanes to gain economies of scale.
NOL’s supply chain management business, APL Logistics recorded 5% growth in fourth quarter revenue to $458 million and a core EBIT of US$20 million.
“APL Logistics maintained its positive performance due to a steady revenue growth across all markets,” said APL Logistics president Beat Simon.
Photo: Buonasera
