NOL: APL HIT BY “DRAMATIC RATE DECLINE”
NOL: APL HIT BY “DRAMATIC RATE DECLINE”
Neptune Orient Lines, the parent company of APL, said that it container shipping subsidiary has been hit by a dramatic decline in freight rates.
APL’s average rates decreased by 9 percent last year, to $2,304 per forty-foot equivalent unit, from $2,523 in 2000, Neptune Orient Lines said in its annual report, just published.
“Across the industry and globally, rates fell significantly,” said Ed Aldridge, chief executive officer of APL, in the report.
“We anticipate moderate growth in volumes during 2002, but unless rates recover, APL cannot show a turnaround this year,” Aldridge said. “No amount of cost reduction can compensate for such dramatic rate decline and neither can the industry sustain services at this level.”
APL said that rates began to soften at the end of 2000 and the slide continued through the year. In major trades they were as much as 20 and 30 percent lower year-on-year in December, the carrier reported.
APL said that it has focused on cost reductions last year, but this was not enough “to counter the rate decline brought on by capacity issues and industry inability to sustain stability.”
“Services have either been scaled back or removed in response to the reduced demand of customers, and as volumes return the focus will be on improving fleet utilization,” Aldridge said.
APL reported that the volume of shipping transactions made by its customers through electronic channels rose from 18 percent to 34 percent of the total during 2001. Nearly a third of its customers actively use APL’s e-commerce products, and 2001 saw a two thirds increase in Internet transactions, the company said.
“By expanding the use of e-commerce solutions, particularly in the areas of documentation, savings have been achieved for both the company and our customers,” Aldridge said.