- By Region
One of the world’s most closely watched container shipping companies, Singapore’s Neptune Orient Lines, provided further evidence of the continuing plunge in the sector’s earning power on Monday, announcing a US$91m loss for the third quarter on rates per container down19 per cent year-on-year.
The loss, on revenue down 9 per cent to $2.21bn, compares with a $282m net profit for the third quarter of 2010, when container shipping lines were recovering sharply after 2009, the worst year in the industry’s history.
Nol’s figures told a similar story to the results put out by several other large container lines. On October 20, Hong Kong’s OOIL, owner of the OOCL container line, announced its third-quarter revenues had fallen 8.3 per cent to US$1.44bn as average revenue per container had fallen 14 per cent against 2010’s third quarter. China Cosco Holdings last week announced a third-quarter loss of RMB1.63bn against at RMB2.68bn profit last year, on revenue down 15 per cent to RMB18.2bn.
All the lines have reported transporting rising volumes of containers – used mainly to carry manufactured goods and components – but falling revenues per container because of excess ship supply. Many container lines are taking delivery of ships ordered during the industry’s pre-2008 boom amid far slower than expected growth.
Ng Yat Chung, Nol’s chief executive, said the liner shipping industry – shipping lines that offer scheduled services, most of them container ships – faced slowing trade demand, excess capacity and fuel costs that were significantly higher than a year ago. Fuel prices for the quarter were 45 per cent higher than in the same period last year.
“Our urgent priority is to drive down costs and increase efficiency,” Mr Ng said.
On the outlook for the rest of the year, the company warned that global economic conditions had not improved. Nol has made a $158m net loss for the year to the end of September, against a $283m profit last time, on revenue up 2 per cent to $6.81bn.
“With continued low freight rates in container shipping and slowing trade demand, Nol Group expects to report a loss for the full year in 2011,” it said.
Nol operates the world’s seventh-largest container ship fleet.
It is closely watched because it is widely regarded as well run. It also reveals far more about its operations than most rivals.