Neptune Orient Lines reported a $57 million loss on Friday as its APL liner shipping operation's pricing fell 9 percent in the second quarter, and the shipping line said it will post a loss for the full year if tough rate and capacity conditions don’t improve.
The loss following a $100 million profit a year ago came as APL's container's quarterly revenue stayed flat at $1.9 billion, and sent the Singapore-based carrier into the red along with a growing array of carriers.
“Deteriorating conditions in the global economy are resulting in weakened trade demand and continued pressure on freight rates. Unless these conditions improve, NOL will post a full-year loss,” the company said.
NOL posted a net loss of $67 million for the year’s first half, compared with a $1 million profit in the first half of 2010. Revenue rose 1 percent to $2.2 billion in the second quarter and 9 percent to $4.6 billion in the first half.
“Conditions are challenging throughout the shipping industry,” said Ron Widdows, the Singapore-based company’s CEO. “In this environment we are working aggressively to bring down costs while keeping our assets well utilized.”
APL, the group’s liner unit, reported a $53 million loss in core earnings before interest and taxes, compared with positive EBIT of $102 million a year earlier. For the first year’s first half, core EBIT was negative $61 million, compared with plus $13 million in 2010.
APL’s revenue was up 7 percent to $4 billion in the first half.
Average revenue per 40-foot-equivalent unit fell 9 percent to $2,539 in the second quarter, and it rose 3 percent to $2,570 in the first half, mainly due to lower Asia-Europe rates.
Volume rose 7 percent to 692,000 FEUs in the quarter and 8 percent to 1.46 million FEUs for the year’s first six months.
“Rate pressure, coupled with a 23 percent year-on-year fuel price increase in the first half of 2011, negated the benefit of higher volume,” said APL President Kenneth Glenn. “Our job now is to accelerate revenue growth while managing down costs in every aspect of our business, from terminal operations to the way we procure all other services.”
APL Logistics, NOL’s supply chain management business, posted a 22 percent increase in core EBIT to $33 million, as revenue rose 18 percent to $682 million. The increases were attributed primarily to gains in contract logistics, which includes rail and land transport business as well as auto logistics, and in international services.
“Increased volume in most of our business lines is driving revenue higher,” said APL Logistics President Jim McAdam. “We are encouraged by the increasing contribution of emerging markets, particularly in China, to our first-half performance.”