Both box volumes and revenues for Hong Kong-listed Orient Overseas Container Line (OOCL) fell on all trade lanes in the first half of the year, based on company figures released today.
Nonetheless, Orient Overseas (International) Limited (OOIL), OOCL’s mother company, announced a group profit after tax of US$239 million in the six months ended June 30, 2015, compared with $181.3 million in the same period in 2014.
The profit included investment income of $27.2 million from Hui Xian and a net fair value gain of $9.8 million on the revaluation of Wall Street Plaza.
Compared to the first half of 2014, OOCL liner lifting dropped by 2.3%, load factor by 4%, and revenue by 6%.
Total liner revenue fell 6.4% to $2.70 billion in the first half of 2015 from $2.89 billion in the first half of 2014. Average revenue levels in some trade lanes reached “new post-global financial crisis lows,” with an average revenue per TEU drop of 4% in the first half, according to an emailed official release.
C C Tung, chairman of OOIL, said, the industry experienced a volatile period during the first half. The earlier months experienced a relatively stable freight market, but in the latter half, with idling ships reactivated and newbuild capacity delivering, “freight rates moved rapidly downwards, forcing margins to narrow.”
“It is likely that the industry as a whole will report mixed results for the half year,” added Tung.
On the outlook for the container shipping market, he said the group remains mindful and cautious of the over-capacity in 2015 and the large orderbook for the year. “The supply overhang is likely to exert pressure on freight rates in the second half of the year.”
Tung added: “Until sustainable demand growth is achieved, freight rates will continue to be under pressure. This could hardly be more evident than it was in the second quarter of this year, when demand growth was less than satisfactory in certain trade lanes, especially that of Asia-Europe.”
During the next six months, Tung said revenue remains uncertain given the supply and demand imbalance, and “cost efficiency remains the critical factor for better margin performance.”
He, however, remains optimistic. “The industry is hopeful that positive trade growth, especially in the Trans-Pacific and Trans-Atlantic trades, and to a degree in the Intra-Asia trade, will provide support to the underlying market.”
Moreover, he said, “the industry takes comfort that scheduled new deliveries are relatively limited in 2016, and is hopeful that cargo growth, especially in Asia-Europe and intra-Asia, will recover a more favorable trajectory.”
“The world economy is on a more positive trajectory now. With more sustainable recovery worldwide, a more favourable supply and demand balance in 2016, and better alliance cooperation dynamics, the container transport industry should find itself in a more positive operating environment looking into next year,” he said.
In the first half of 2015, the group took delivery of its fifth and sixth SX class 8,888-TEU vessels from Hudong-Zhonghua Shipbuilding in Shanghai, namely the “OOCL Taipei” and “OOCL Utah.”
Tung said, “There are two remaining vessels from this series, both of which are to be delivered in the second half of 2015.”
On April 1, 2015 the group announced it had placed orders for six vessels of the 20,000-TEU class with Samsung Heavy Industries of South Korea. Delivery is planned for 2017.
Photo: Jansen Chua
