Orient Overseas (International) Ltd. Chairman C.C. Tung said 2016 saw some of the most difficult markets and an overhang of capacity.
Orient Overseas (International) Ltd. recorded revenues of $5.3 billion and a loss attributable to equity holders of $219 million in 2016.
Orient Overseas (International) Ltd. (OOIL), the parent company of ocean carrier Orient Overseas Container Line (OOCL), recorded a loss attributable to equity holders of $219 million in 2016 compared to a profit of $284 million a year prior.
OOIL’s operating loss totaled $138 million in 2016 compared to an operating profit of $353 million.
Earnings before interest and taxes (EBIT) from the company’s container transport and logistics business stood at a negative $185 million in 2016 compared with a positive EBIT of $294 million in 2015.
Revenues fell to about $5.3 billion in 2016, down from $5.95 billion a year prior, despite OOCL increasing container volumes.
During the year, OOCL transported 6.1 million TEUs, up from 5.6 million TEUs in 2015.
OOIL Chairman C.C. Tung said, “This past year has seen some of the most difficult markets in our industry’s history. A combination of steady but low growth in most regions and an overhang of excess supply built up in recent years led to extremely challenging conditions in many trade lanes for most of 2016.
“As fuel prices rose in the second half of the year, industry performance was badly affected by freight rates that frequently sank below the levels seen in 2009,” he said.
“The financial results reported by the industry as a whole give a clear indication of just how severe conditions became. A quarter-by-quarter or half-by-half analysis of industry results since the middle of 2015 paints a picture of strengthening headwinds,” he added. About 74 percent of OOIL’s 2016 loss occurred in the second half of the year.
In 2016, the group did not take delivery of, nor did it place any orders for, any further newbuildings. NYK Line returned four 13,200-TEU vessels that OOCL had chartered out to the Japanese carrier in 2013.
Earlier this year, there were reports and speculation that OOCL might be acquired by COSCO or CMA CGM, but the company said in January that it was “not aware of, nor is it involved in any bid relating to the company or OOCL.”
Tung said Monday that “in these turbulent times, with industry consolidation occurring at a pace that few, if any, had expected, OOCL continues to build its future on the twin pillars of alliance membership and the efficient operation of the most appropriate vessels for each trade lane.”
OOCL is to be a member of the Ocean Alliance, a space sharing agreement with COSCO, CMA CGM and Evergreen, which is to begin operations in April.
Tung said, “Working together with these sizeable and like-minded partners will enable us to continue to offer the highest standards in the most cost-effective manner. Moreover, the Ocean Alliance enables OOCL to grow its business in a considered and measured way.”
OOCL is due to have six 20,000-TEU class vessels enter service in 2017.
“Our investment in these vessels demonstrates our commitment to growing our business intelligently, and allows us to gain economies of scale in all our major East West trades,” Tung said. “At the same time, we will maintain our focus on continuous cost improvement and further efficiency gains. We continue to invest in IT, as a means of improving not only our internal processes, but also our customer interaction and engagement.”
He noted that last April, OOCL opened the first phase of its Middle Harbor Redevelopment Project in the Port of Long Beach. The project is expected to be completed in 2020.
Tung said, “OOCL Logistics continues to perform profitably in what is a competitive sector, and we remain committed to building up our activities in this sphere. We were pleased to add air freight forwarding services to our offering in 2016, and we continue to grow OOCL Logistics further, not least as opportunities related to e-commerce materialize.”