OOIL Plunges to Loss amid Challenging Market
- Business & Finance
Hong Kong-based Orient Overseas (International) Limited, a parent company of Orient Overseas Container Line (OOCL), reported its net loss at USD 56.6 million for the first half of 2016, compared to a net profit of USD 238.6 million seen in the same period a year earlier.
OOIL’s revenue for the first six months decreased to USD 2.5 billion from USD 3 billion recorded in the first half of 2015, mostly due to Orient Overseas Container Line’s (OOCL) lower bunker costs.
The average price of bunker recorded by OOCL in the first half of 2016 was USD 186 per ton compared with USD 352 per ton for the corresponding period in 2015. In the first half of 2016, fuel costs decreased by 41% when compared to the corresponding period in 2015.
Compared to the first half of 2015, OOCL liner liftings increased by 5% and load factor by 1%, but revenue dropped by 17%. Average revenue levels in some trade lanes reached new post-Global Financial Crisis lows, with an average revenue per TEU drop of 21% in the first half.
Commenting on the outlook in the container shipping market, Tung said that, notwithstanding the fact that there have been some tonnage withdrawals and pockets of volume growth in selected trade lanes, if deployed capacity continues to be substantially in excess of demand, “the second half of 2016 will be challenging and difficult.”
“The industry continues to face a supply and demand imbalance. While the orderbook as a percentage of existing fleet is anticipated to drop to 6.7% and 5.5% respectively in 2017 and 2018, the challenge for the next half decade is on the demand side.”
“The first half of 2016 was disappointing for OOIL. We expect continued challenges given the global landscape,” he said.