Bunker Costs Help Cushion Q1 Loss for Singapore-Based NOL

NOL attributed a positive core EBIT in first quarter to a $155 million cost savings and lower fuel cost.

Neptune Orient Lines Limited (NOL) Thursday reported low bunker prices helped cushion a net loss of $11 million for the first quarter of 2015, an improvement on the $98 million net loss for the same period last year.

The Singapore-based global container shipping and logistics company said its container shipping business, American President Lines Ltd. (APL) "continued to operate in a challenging environment", reporting 2015 first quarter revenues of $1.6 billion, a slide of 15 percent compared to the period last year.

Volumes, in turn, also slid 15 percent year-on-year from 785,000 to 667,000 forty-foot equivalent units (FEU), which NOL attributed to planned capacity cuts in unprofitable trade routes and the impact from US West Coast port congestion.

APL’s average freight rates also dipped 8 percent versus the same quarter last year.

“APL eliminated unprofitable capacity for better yield in the first quarter of 2015. We extracted cost savings from lower bunker cost and through more efficient land and terminal operations as well as vessel and voyage operations,” said APL President Kenneth Glenn.

"These efforts help mitigated the impact of lower volumes and freight rates that we saw in the first quarter."

Looking ahead, Ng Yat Chung, President and CEO of NOL Group, warned that "the liner industry continues to face persistent over-capacity and uncertain global economic prospects" but did note that US West Coast congestion is now easing. 

In February, NOL announced the sale of APL Logistics for $1.2 billion in order to focus on its box ship business, a transaction NOL expects to be completed by mid-2015.