Orient Overseas (International) Ltd. and its subsidiaries reported a profit of US$181.6 million for 2011, but the company warned the outlook for its container line business remains bleak.
The Hong Kong-based parent company of OOCL saw its profit decline from $1,867 million in 2010, but that figure was boosted by the $1,005 million sales of its property business.
The company said OOCL failed to deliver a profit in the second half of 2011 as operating conditions became increasingly difficult in the container business.
“While overall global demand levels grew, the slow rate of economic growth in the United States and in Europe saw only muted volume growth for container trade to those markets,” said Chairman C.C. Tung. “Demand growth proved inadequate for the orderly absorption of new-build capacity that was delivered during the year.”
OOCL’s liftings rose 6 percent in 2011 compared to a year earlier, but the peak summer season was weak and average revenue per TEU fell 7 percent as freight rates, which plummeted 29 percent in the Asia-Europe trades, collapsed in the face of excess capacity. High bunker costs also increased the financial pressure on lines.
Tung said the delivery of larger 13,200-TEU vessels in 2013 and 2014 would improve OOCL’s competitiveness, but he is bearish about the rest of this year.
“Looking to 2012, we expect trading conditions to continue to be difficult,” he said. “The major markets of North America and Europe are likely to see low levels of demand growth, given the slow economic growth in those economies.
“Scheduled new-build capacity delivering in 2012 exceeds that of 2011, and is again dominated by the large vessels destined for deployment in the Asia-Europe trades. While there has been some freight rate improvement on both Asia-Europe and trans-Pacific routes since the beginning of this year, freight rates for those trades do not yet fully cover costs, especially given the increase in the cost of bunker fuel that has occurred.”
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