Orient Overseas (International) (OOIL), the parent company of Orient Overseas Container Line (OOCL), said its profit had risen 32 percent year on year (y/y) to $238.6 million in the first six months of 2015, due cheaper fuel costs helped it tide over a slump in freight rates.
However, revenue declined 6 percent to US$3 billion during the same period as overcapacity and weak demand continued to plague the container shipping industry, a stock filing of OOIL said on 10 August.
“The volatility of freight rates indicates how competitive the industry is. The theme of the industry this year is carriers’ efforts in cost-efficiency and yield management amid a weak market,” said acting chief financial officer Alan Tung Lieh-sing.
New capacity in the market rose 10 percent this year, while shipping demand grew only 4.7 percent, putting pressure on freight rates, said Tung.
It is expected that 1.3 million twenty-foot equivalent units (TEU) of capacity will be delivered this year, sending the total capacity in the industry up by 6 percent, the Hong Kong Economic Journal quoted Tung as saying.
OOCL saw total cost per standard container drop 9 per cent in the first six months of the year, achieved mainly through a 38 per cent reduction in bunker costs. The savings also boosted the company’s bottom line despite lower vessel utilisation and revenue.
The Hong Kong carrier also reported solid recent growth on the trans-Pacific trade, with June volumes up 8.5 percent, and Tung said frontline colleagues were a continuing improvement in volumes and rates. Load factors on the trade are in the low to mid-90s.
On Asia-Europe, the picture is not so rosy. Trade volume is actually down by 5 percent compared to a growth of 8.7 percent in the first half of last year and OOCL’s headhaul rates on the trade were disappointing with load factors around 90 percent.
As at 30 June 2015 OOIL had total liquid assets of $2.8bn and a total debt of $4.2bn and is “comfortably within its target of keeping net debt to equity ratio below1:1” giving it one of the strongest balance sheets in liner shipping.