Asian shipping lines experience sinking profits

The losses announced by Hanjin Shipping last week demonstrate the possibility that a period of severe loss for the container operators has begun.

Over 2011, the company’s container business lost KW550bn (€375m) as compared to a profit of KW635bn (€434m) in 2010. This was despite a fall in revenue of just 2.6% and a 12.4% increase in container volumes, driven by higher intra-Asian trade.

The trio of Japanese carriers also announced both depressed results and a more pessimistic forecast for the full year.

NYK, the largest of the three, saw its container shipping business fall into an operating loss of ¥13.4bn (€133m) for the third quarter ended December 31, 2011. The company revised its forecast for the whole year downwards, seeing a near doubling of operating losses for the entire Group. The performance at MOL OSK Lines was similar, with the third quarter seeing losses (ordinary income) increase to ¥12bn (€119m), in contrast to the same period last year which saw a profit of ¥8bn (€80m). K Line, which reported its numbers in terms of nine monthly figures, also saw a loss of ¥31bn (€308m), although here revenue fell by a more substantial 12%.

Overall the demand for container traffic is moderately healthy, with growth generally in the low single figure percentages. However, profits are being damaged by low container freight rates.

All these lines are busy consolidating services and reducing costs by entering alliances. Nonetheless, the clear evidence is that there is too still much container shipping capacity in the market. These losses are substantial; however none of the companies are under immediate financial pressure, although the poor state of the financial structure in much of the world may narrow their options. If this trend is sustained over the next couple of quarters the strategic situation of many shipping companies is likely to become critical.

Quelle: eyefortransport
Portal: www.logistik-express.comwww.logistik-express.com