OOCL operational profits slide by half

OOCL operational profits slide by half    OOCL's parent company said Friday the Hong Kong liner carrier increased revenue 16 percent in 2008, but profit dropped 89 percent to $272 million.
   2007 profit swelled to $1.9 billion with the sale of Orient Overseas International Ltd.'s terminal operations subsidiary. But even excluding the terminals division sale, OOIL's profit slid 50 percent in 2008.
   Revenue grew from $5.7 billion in 2007 to $6.5 billion in 2008.
   'We have now entered what I expect will be a protracted downturn for the container shipping industry,' said C.C. Tung, OOIL chairman, in announcing the group's 2008 financial results. 'The acute deterioration in the global economy has come at a time when the industry faces an unprecedented supply of new capacity, particularly in the form of very large vessels. This combination of low demand growth and excessive new supply will almost certainly present the worst set of market dynamics that the container shipping industry has ever had to deal with.'

Tung

   Tung said OOCL managed to stay profitable even in the dire dying days of 2008.
   'The impact of the financial crisis on the global economy has seen trade growth slow dramatically,' he said. 'This was most noticeable in the last quarter of 2008 which, while still profitable for us, saw sudden and severe reductions in demand across a number of trades.'
   He also said, as have other shipping executives in recent weeks, that the bad news for the industry may stretch through 2010 even if demand recovers.
   'We are managing the business in 2009 with the expectation of a continued deterioration in the shipping markets over the course of the year,' Tung said. 'The particularly severe drop in freight rates in the fourth quarter of 2008, compounded by further rate reductions and volume declines in the first quarter of 2009, has made the continuation of services at historic levels unsustainable.
   'Should the various stimulus packages that have been introduced by governments around the world be as successful as is hoped, then we could see a recovery in demand by the end of this year. However, if there is only a gradual improvement in the global economy during 2010, then it is likely that conditions in the container shipping industry will take longer to improve given the worsening supply and demand balance over the next three to four years if there is no material change to the current schedule of new vessel deliveries.'