Horizon Lines lost $7 million in the second quarter compared to a $4.1 million profit in the same period a year ago, as the U.S. domestic container line’s trans-Pacific business struggled because of higher fuel costs and soft rates.
The Charlotte, N.C.-based company said it expects its new Asian service to continue to operate at a loss, but the rate of loss will fall next quarter. Utilization between West Coast ports and the ports of Ningbo and Shanghai was 59 percent in the second quarter.
The company’s operating revenue increased 5.5 percent year-over-year in the second quarter. Horizon’s container volume grew 16.4 percent to 75,208 loads within the same period, largely due to the new Asian service, which began December 2010.
"Looking at our traditional domestic ocean shipping business, Alaska and Hawaii continued to demonstrate operating profitability during the second quarter, although higher fuel costs and volume declines in Puerto Rico and Hawaii negatively impacted results relative to a year ago,” said Stephen Fraser, the company’s president and CEO.
He said rate pressure continued in the Puerto Rico trade lane because of overcapacity, whereas Alaskan operations ran at near-full capacity utilization and continue to generate strong third-party terminal services revenue.
Horizon said it and the majority of holders of its 4.25 percent convertible senior notes continue to make progress in negotiations regarding refinancing, and it expects a definitive transaction in August.