Star Reefers swung to a $124 million net loss in 2011 from an $89,000 profit a year ago, as the Norwegian refrigerated ship operator was hit by record low freight rates and increased competition from container ships.
The loss narrowed to $24.9 million against a $100,000 profit in 2010 after stripping out a $99.1 million impairment charge on older ships that have been or are likely to be scrapped. Net operating revenue from Star Reefers’ 40-ship fleet contracted to $155.1 million from $180.1 million.
“The year 2011, together with 2010, represents one of the poorest periods in the reefer industry’s history, with continuing low rates, high costs and the full impact of aggressive competition from container lines,” the Oslo-listed carrier said.
Banana exports from Ecuador and Central America have been “in a state of near collapse” since April because of the weak global economy, early hot weather in the Mediterranean and depressed demand in North Africa caused by political disruptions.
Star Reefers said a direct [Maersk Line] service between Ecuador and the Mediterranean and the Black Sea, launched in the second half of 2011, snagged the transport of 600,000 cartons of bananas weekly, equivalent to three conventional reefer shiploads. Star said the service is being operated at levels below cash flow break even.
“Both the fruit majors and the retail chains are seeking lower transportation costs and have started to ship more bananas with container lines, which have been willing to set up new services and drastically reduce their freight rates at or below cost in order to obtain market share,” Star said.
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