OOCL more than doubles profit in 2012

Hong Kong’s Orient Overseas Container Line (OOCL) more than doubled profit to US$197.2 million last year compared with US$86 million in 2011 on the back of higher freight rates and container volumes.

Profit of parent Orient Overseas (International) Ltd (OOIL) jumped 63 percent from $181.6 million to 296.4 million, reported the South china Morning Post.

The company, which is controlled by the family of former Hong Kong Chief Executive Tung Chee-hwa, said it remained cautious on market outlook due to excess capacity and intense competition, which could pressure freight rates. Anaemic growth in the US and little improvement in Europe's economic conditions will make 2013 as "challenging" as last year for OOCL, said Ken Cambie, the chief financial officer of OOIL.

First-quarter cargo demand was as difficult as 2012 although container rates were higher than this time last year, he said.

Cambie said OOCL was looking to increase rates in the coming months as cargo contracts are renewed with freight owners on transpacific and Asia-Europe trades and general rate rises are implemented. Asked if there was concern cargo owners could resist rate rises, Cambie said OOCL was seeing a typically seasonal pattern with a weak January and this was expected to be followed by a stronger spring and summer.

Johnson Leung, the head of regional transport at Jefferies, said container lines are expected to get part of the planned $700 per TEU increase on Asia-Europe trades from March 15. Cambie said Soren Skou, the chief executive of Maersk Line, the world's largest container shipping company, expected freight rates would be higher in 2013 than last year.

But warning of potentially choppy conditions ahead, Cambie said there may be a trend of switching factory production back to the US, while Chinese manufacturers could refocus on the mainland's domestic market, creating a slowdown in exports. Both would hit cargo demand at a time when delivery of new container ship capacity will rise.

Some 274 container ships averaging 6,400 TEUs are set to be delivered globally this year, compared with 207 box ships averaging 6,100 TEUs that were delivered last year and 161 ships averaging 7,300 TEUs in 2014.

Cambie confirmed that the average load factor on OOCL's fleet of 98 ships fell to 73 per cent, down three per cent compared with 2011. But the firm was "quite happy to take 73 per cent and be profitable rather than 90 per cent and be losing money".

Jon Windham, the head of industrials research at Barclays, said OOIL "did well relatively" to comparable container lines. He added the outlook was "pretty negative, but probably accurate". Explaining the buoyant result of OOCL, Cambie said improving freight rate levels in the second quarter continued into the third quarter to give a much stronger second half.

OOCL posted a second half operating profit of $111 million against a US$38.3 million operating loss in the second half 2011. But he said there was a disappointing end to the year as freight rates and container volumes deteriorated in the fourth quarter.

CSCL participates in UASC's new GEM service linking Mideast to India

CHINA Shipping Container Lines (CSCL) is teaming up with United Arab Shipping Company (UASC) on its new GEM service connecting Turkey, Port Said, Red Sea, Middle East Gulf, Pakistan and India.

The first GEM sailing is scheduled for November 22. The service will call at: Port Said, Mersin, Istanbul, Izmir, Port Said, Yanbu, Jeddah, Khor Fakkan, Sohar, Port Sultan Qaboos, Karachi, Hazira, Mundra, Khor Fakkan, Jebel Ali, Bahrain, Jubail, Khor Fakkan, Jeddah, Yanbu and back to Port Said.

For the first time, the port rotation includes the Indian port of Hazira in Gujarat state, which is located about 120 nautical miles north of Nhava Sheva and Mumbai. The first call at Hazira is slated for December 20. The ships will be handled at the new Adani Hazira Container Terminal (AHCT).

A report by Alphaliner said the GEM service will also include sections of UASC's UAE-Pakistan-India service (IMC1/IMC2) as well as the carrier's Middle East feeder service (AEC1), from where the UASC ships switch deployment to join the GEM service.

In addition to direct port calls, the GEM service will provide connections to other East Mediterranean and North African ports through relay services via Port Said and will serve a number of Black Sea ports through relay services from Istanbul.

The CSCL will provide one of the eight 3,800- to 4,250-TEU ships used to operate the service, namely the 4,250-TEU Xin Yang Shan. The other seven vessels will be provided by UASC.

NYK liner trade slides 250pc to post annual loss of US$571 million

JAPAN's second biggest container line, NYK, has posted an annual loss of JPY44.7 billion (US$571 million)in the liner trade business, down 250 per cent against last year's profit of JPY30.2 billion for the fiscal year 2011, ending on March 31, 2012.

NYK, the world's 13th largest container carrier, attributed the loss to high bunker prices and a decline of freight rates for its core trade lanes, saying overcapacity was to blame.

Overall group revenues declined 6.7 per cent to JPY 1.80 trillion. Revenue for the liner business was JPY418.7 billion, resulting in an operating loss of JPY43 billion.

The poor performance in liner trade business was the main cause of NYK's deficit for fiscal 2011. The company said in its annual report that the supply-demand balance had deteriorated with the completion of numerous large containerships, mainly on European routes, which resulted in plummeting rates.

Sluggish cargo movements were also experienced, which were worsened by the "Great East Japan Earthquake and flooding in Thailand."

The company said it had taken actions to tackle the problems. One of the main cost reduction measures was the practice of slow steaming to reduce bunker oil consumption, resulting in cost savings of JPY30 billion.

This saving, said NYK, combined with reductions in selling, general and administrative expenses and variables expenses in the liner trade business, contributed to a total cost reduction of JPY34.5 billion.

However, its "measures were unable to fully absorb a larger-than-expected downturn in market prices," said NYK.

For fiscal 2012 ending March 31, 2013, NYK chief financial officer Kenji Mizushima said: "We plan to achieve profitability through further cost reductions and contributions to business results from businesses with stable freight rates, which we are focusing on expanding under the medium-term management plan."

Singapore's APL to quit Westbound Transpacific Stabilisation Agreement

SINGAPORE's APL, the container shipping arm of shipping group Neptune Orient Lines (NOL), is quitting the Westbound Transpacific Stabilisation Agreement (WTSA), the discussion forum covering the westbound trade from the US to Asia, with effect from September 1.

APL is the third carrier to leave the WTSA over the past decade, following in the footsteps of MOL's departure in June 2005 and previously Maersk Line, which was known at the time as Maersk Sealand and left the group in July 2002.

This reduces WTSA members to nine shipping lines: Hapag-Lloyd, Hyundai Merchant Marine (HMM), "K" Line, NYK Line, OOCL, Cosco, Evergreen, Hanjin and Yang Ming.

According to Alphaliner estimates, the remaining WTSA carriers, as of August, control 55 per cent of the total westbound Asia-North America capacity.

It said the 15 member ocean liners of the WTSA's eastbound counterpart, the Transpacific Stabilisation Agreement (TSA), control an estimated 92 per cent of total capacity on the Asia-North America route.

TSA members include: APL, Maersk, China Shipping, CMA CGM, Mediterranean Shipping Company (MSC) and Zim.

The Westbound Transpacific Stabilisation Agreement  (WTSA) was established in 1990 to replace a more rigid rate conference system for the US-Asia market. It offers a discussion forum for its members to develop non-binding guidelines relating to freight rates, surcharges and other fees.

EVERGREEN optimistic about box SHIPPING MARKET prospects in third quarter

VICE Chairman of Evergreen Bronson Hsieh says he is positive about the container shipping market in the third quarter as carriers have increased rates, kept his books balanced and even made a little profit despite weak US and European economies, Xinhua reports.

Mr Hsieh said, according to Alphaliner's prediction, the world container shipping market will be growing at a rate of 6.5 per cent this year. In the later half of year, US cargo traffic growth will grow 3.5 - 5.5 per cent, while Europe's will go up from zero to 2.5 per cent. Besides, IMF also estimated the world's GDP growth rises to 3.5 per cent this year and 4.1 per cent next year.

Mr Hsieh stressed that the outlook for the rest of this year and next year is optimistic. Though capacity will grow from 7.9 per cent to 10.6 per cent next year, the world's economy might turn better and is able support the industry.

During the passed three years, there were 253 ships of over 8,000 TEU come into service. But Evergreen decided to use small and medium ships to enhance vessel utilization rate. Starting from July, Evergreen will deploy 30 new and greener L-type ships by 2015.

Mr Hsieh pointed out that for the shipping industry, making profit is not necessarily affected by the world's economy. After the world's financial crisis in 2008, Evergreen recorded a loss of US$20 billion in 2009 but made a profit of $15 billion later in 2010 because of tighter capacity control. This year's GDP growth is slower than in last year, but the carriers has succeeded in raising rates in March, April and May.

picture: google.com

CSAV posts net 2011 loss of US$1.24 billion, revenue falls 1.2pc

CHILEAN shipping major CSAV, the world's 17th largest carrier, posted a loss of US$1.25 billion in 2011 down from a $182 million profit in 2010 with an operational decline of $959 million and 1.2 per cent fall in revenue to $5.15 billion.

In the fourth quarter, the carrier lost $145 million on operations, posting a $280 million loss on discontinued operations with a $205 million provision for losses to be incurred in 2012 as a result of a restructuring started last May.

CSAV has announced it intends to make its SAAM terminal, tug and logistics businesses into a separate company. Its SAAM unit's operating profit was up 15 per cent to $64 million in 2011 with a 18 per cent rise in revenue to $426 million.

Also, the company has undertaken a second shareholder stock offering which helps the carrier secure additional $1.2 billion capital.

"We are a new company today," said the carrier's general manager for shipping containers Oscar Hasbun. "Through this restructuring we are better prepared to face the scenario affecting the industry and on a better footing for benefiting when market conditions improve."

CSAV said 90 per cent of its operations are joint services, compared with 30 per cent in early 2011. It has been returning chartered ships and building its self-owned fleet to exceed 30 per cent in the second half of the year from nine per cent at the outset of 2011.

source: Shippingazette [dot] com

MOL president warns of 'prolonged harsh' business environment

MOL president Koichi Muto says last March's Japanese earthquake has hit his company hard, compounding the effect of a deteriorating business environment, which coupled with a strong yen, high fuel prices and sinking rates due to oversupply, are combining to create an industry-wide downturn.

As a result, the first half of fiscal 2011 saw the biggest loss the group has ever suffered.

"The management environment surrounding MOL remains unpredictable and clouded by imminent oversupply of vessels as more new ships reach completion, and slumping business sentiment. These factors are expected to impact containership operations, especially, where conditions are extremely harsh with the impending completion of a large number of ultra large containerships, and the prolonged slump in the economies of Europe and the US," said Mr Muto.

"Large-scale completion of new vessels is expected to continue this year, so we should prepare ourselves for a prolonged harsh business environment, and approach it with due care," he warned.

"After 2013, however, the number of new vessels completed is expected to level off, providing light at the end of the tunnel. Over the medium to long term, we predict that the excessive production capacity of shipyards in China, two-thirds of which is privately operated, will be brought into balance by the market mechanism, and we expect the oversupply of ships to be relieved," said Mr Muto.

Talking about ensuring the survival of the company he identified four key areas to strengthen, namely to provide safe transportation services at a competitive price while effectively reducing the shipping impact on the environment.

The second key area is its financial performance. To strive to improve the balance sheet and cash flow in the short term through persistent efforts to trim costs and other measures. Thirdly, its performance, in terms of ensuring that cargo is delivered in perfect condition and on time. The fourth area for improvement is sales with the goal being to build stronger relationships with customers.

With regards to slow steaming, last year most MOL ships made more diligent efforts to apply slow steaming. Mr Muto said this practice not only reduces fuel consumption, but is also expected to help mitigate the impact of oversupply in vessels and help the environment.

These sentiments were echoed by in a speech from NYK president Yasumi Kudo: "Since stagnant demand in the west and oversupply of mega-ships are predicted, our ordering of new containerships should be suspended for a while, and a light-asset business model should be adopted whereby vessels and space would be leased as needed, thereby minimising downside risks and sustaining business," he said.

According to the NYK head, strong growth in emerging economies such as in Asia would be important for the carrier, in light of the difficult economic and trading conditions currently in Europe and the US.

"I am confident that we are heading in the right direction to grow further by differentiating ourselves and focusing on emerging markets such as Asia," said Mr Kudo.

"When we focus on the emerging countries we see a different outlook ... rapid economic growth in Asia and the developing countries, which account for more than half the population of the world, is the biggest opportunity, without any doubt.

"We cannot deny the risk of weaker demand in the west having a negative effect on Asia, which largely depends on exports. However, growing demand in Asia will be the key to strong growth in the region and overcoming the slump in the west.

"Now we see a major shift in the trend, Asia is no longer only an exporting region, but creating an enormous consumer market surpassing the US or Europe," he said.

picture: google.com / source: Shippingazette.com

MSC and Hamburg Sud merge Mediterranean-east coast South American strings

GERMANY's Hamburg Sud and Geneva's Mediterranean Shipping Co (MSC) will merge their Med-east coast South America services into one from mid-January.

The revised rotation will be Valencia, Gioia Tauro, Livorno, Genoa, Marseilles-Fos, Barcelona, Valencia, Suape, Rio de Janeiro, Santos, Buenos Aires, Montevideo, Rio Grande, Navegantes, Itapoa, Santos, Rio de Janeiro, Suape, Tangiers and back to Valencia.

The eight-ship will have seven vessels from MSC and one from Hamburg Sud, averaging 5,900 TEU.

Hamburg Sud now operates a service with CMA CGM, CSAV, and Zim with a rotation of Valencia, Tarragona, Livorno, Genoa, Vado Ligure, Barcelona, Rio de Janeiro, Santos, Buenos Aires, Montevideo, Itajai, Paranagua, Santos, Pecem, Tangiers and back to Valencia.

The MSC loop rotates through Valencia, Sines, Las Palmas, Salvador, Rio de Janeiro, Navegantes, Paranagua, Rio Grande, Santos and back to Valencia, deploying six MSC vessels averaging 5,341 TEU.

picture: google.com / source: shippinggazette

Maersk Line adds Le Havre, Hamburg, Zeebrugge to Daily Maersk from February

DANISH shipping giant Maersk Line has announced it will add port calls at Le Havre, Hamburg and Zeebrugge in February in its Daily Maersk service to enhance its "conveyor belt" concept on its main Asia-Europe route.

The service requires a 26-day transit from Shanghai to Zeebrugge and Le Havre and 28 days to Hamburg, reports Newark's Journal of Commerce, adding that Maersk has ended its vessel sharing agreement with CMA CGM after the newly announced CMA CGM-MSC alliance.

Said Maersk's vice president of Europe service Vincent Clerc: "The cancellation of the vessel sharing agreement ... offered us another opportunity to look at how we serve customers moving cargo between Asia and north Europe.

"We found that without CMA we could actually offer an enhanced service to more customers in more corridors and maintain our promise on the Daily Maersk corridors. So that is what we did."

CMA CGM chief financial officer Michel Sirat said the key aim of forming an alliance with MSC is to upgrade services so that the two carriers can compete with Maersk.

The 13,092-TEU Maersk Edison will be responsible for the last sailing in the vessel sharing agreement with CMA CGM, with a cut-off in Ningbo, China on February 16.

The world's largest carriers said it will offer a new Asia-Mediterranean service to replace the one partnering with CMA CGM now.

The report said shippers will benefit from shorter transit times and higher reliability. But they cannot receive cash compensation for late guaranteed deliveries available on the Daily Maersk service connecting four Asian ports with Bremerhaven, Rotterdam and Felixstowe.

Daily Maersk currently deploys 70 ships, offering daily Asia-Europe service seven days a week between Ningbo, Shanghai, Shenzhen-Yantian, Tanjung Pelepas and northern Europe.

source: shippinggazette / picture: google.com