Wednesday 14th Aug 2019 - Logistics & Supply Chain

OOCL reports tough times for Asia-Europe

Container Line OOCL has reported a 13 per cent drop in sales on its Asia-Europe trade for the second quarter of 2011 reflecting the tough market conditions. Sales were down from $326m to $284m despite the fact that lifting were up 18 per cent to 224,572 TEU.

Trans-Pacific traffic was down both in terms of liftings and revenue but trans-Atlantic and intra-Asia trades both saw rises in both traffic and revenue in the second quarter.

For the first half of 2011, OOCL’s total liftings were 9.4 per cent higher than in the first six months of 2010, while freight revenue per TEU was 0.9 per cent lower, primarily reflecting the impact of the decline in freight rates on the Asia-Europe trade.

As a result, parent group Orient Overseas International reported a 39 per cent drop in operating profit for the first half to $188m.

OOIL chairman C C Tung said: “Following the record result for our container transport and logistics business in 2010, trading conditions in the first half of the year have been difficult and the outlook for the full year is disappointing. Demand levels remain reasonable as reflected in an overall year-on year increase in liftings, but, with the rate of new capacity introduction having outpaced demand growth, freight rates on many east-west trades have steadily deteriorated since last year. This is particularly noticeable on the Asia-Europe trades.

“The deterioration in freight rates has occurred despite the need for improved revenues to offset the significant increases in the price of bunker and other energy related costs that have occurred this year.”

On the outlook in the container shipping market, he said: “The late introduction of peak season surcharges on the Trans-Pacific trade, despite reasonable levels of demand, is an indicator of the difficult trading conditions expected for the remainder of the year. Capacity deployment issues in the industry are likely to continue in the near term, and the traditional peak season lift in demand may give only limited improvement, at best, in average freight rates over the remainder of the year. There is uncertainty as to how strong consumer demand in the United States will be over the Thanksgiving and Christmas retail selling seasons this year following the recent termination of the US Government’s fiscal and monetary stimulus programmes.”

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