OOIL Sees Loss in First Half of 2013, Citing High Fuel Costs

Chairman CC Tung said falling freight rates hurt the business

Orient Overseas (International) Limited [HKG:0316] (OOIL) reports that it swung to a $15.1 million loss in the first half of the year after making a $117.2 million profit in the same period in 2012.

The company said that with high bunker costs, weak cargo growth, and capacity oversupply hurting the market, its revenues fell 3 percent to $3.0 billion.

"The operating environment in the first half of 2013 was characterised by the deterioration of freight rates from the last quarter of 2012, especially on the Asia-Europe trade, and the extremely competitive freight rates recorded in both the Trans-Pacific trade and the Intra-Asia trade," said Chairman C C Tung.

"A series of rate increases during the second quarter in the market on the East West trades generally could not be sustained."

For the second quarter, volumes transported fell 2.6 percent to 1.3 million twenty-foot equivalent units (TEU), with trans-Pacific and Asia-Europe routes taking the biggest hits.

Revenues on the Asia-Europe routes fell 24.9 percent to $245.6 million.

During the first half of the year, the company took delivery of five 13,200-TEU "Mega" vessels and two 8,888 TEU "SX" class vessels as part of an effort to modernise its fleet to improve cost structures.

Four more 8,888 TEU vessels were originally contracted for delivery in 2013 but will now be delivered in 2014 and 2015.

"These vessels, originally contracted for delivery this year, were delayed as part of our joint initiative with the shipyard to improve main engine efficiency," Tung said.

Port operator DP World recently noted that ship sizes are rising on trade routes globally as the largest-ever vessels join the Asia-Europe routes, pushing the next sizes of ships to other areas.