"Huge Contraction in Freight Rates" Pulls NOL Back into the Red

by Ship & Bunker News Team
Monday November 2, 2015

Singapore-based Neptune Orient Lines (NOL) says it slipped back into the red during 2015's third quarter with a net loss of $96 million, attributing the weak results to a "huge contraction in freight rates" alongside slow global demand.

"The absence of the traditional third quarter peak season in Europe and North America led to severe freight rates erosion in major trade lanes," said Ng Yat Chung, NOL's Group President and CEO.

"We continued to make good progress in managing costs. Unfortunately, this was more than offset by weak global demand and huge contraction in freight rates."

2015's Q3 net loss of $96 million is said to come in comparison to a net loss of $23 million during the same period in 2014.

NOL's container shipping liner, American President Lines Ltd. (APL), reported a drop in revenue during the third quarter to $1.2 billion, a 29 percent decline compared to 2014's Q3.

"APL's average freight rates fell 21 percent amidst pressure from over-capacity in the industry," explained NOL.

"Volume contracted 11 percent, which APL attributed to various reasons, including a significant drop in U.S. exports and weak demand in the Intra-Asia short-sea market."

APL notes that, amid rate falls and volume contractions, the company was still able to maintain a headhaul utilisation of above 90 percent.

In July, NOL announced that it had posted a profit for the first time in six quarters with an overall 2Q 2015 net profit of $890 million.

Ship & Bunker News Team
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