Hanjin Shipping, the first major carrier to report financial results for 2011, said its container operations lost $487 million last year as low rates and high fuel prices offset higher volume.
The South Korean carrier is the first in a series of container lines expected to report heavy losses in the coming weeks.
Hanjin’s loss last year compared with a $532 million operating profit for Hanjin’s container division in 2010 and a $652 million operating loss on containers in 2009.The company’s container volume rose 12.4 percent to 4.17 million 20-foot equivalent units last year but revenue fell 2.6 percent to $6.75 billion.
Poor results from container shipping were partly offset by profits from the company’s smaller bulk division, producing a group-wide operating loss of $437 million. Hanjin’s net loss was $729 million, compared with $257 million profit in 2010.
Hanjin said it expects overcapacity created by deliveries of large new container ships to continue this year but the company said it “believes the market will gradually grow stable due to shipping carriers’ efforts to improve profitability.
“For the container business, there has been success in increasing freight rates at the beginning of the year and shipping carriers will continue to improve their profitability by increasing rates through service rationalization and taking various measures to reduce costs,” the company said in a statement.
Hanjin said it expects a recovery in bulk shipping demand fueled by renewed Chinese demand for iron ore.