OOCL profits up 29.3%, Tung says carriers acted more responsibly in 2007
Orient Overseas International Ltd., parent of Hong Kong-based ocean carrier OOCL, said after tax profit rose 29.3 percent in 2007, to $553.7 million, as group turnover increased 22.6 percent to $5.7 billion.
The company's profit was aided by the completion of the $1.9 billion sale of OOIL's terminals division to the Ontario Teachers' Pension Plan in 2006.
OOIL said it received 13 new vessels in 2007 — two 8,063-TEU, four 5,888-TEU and three 4,578-TEU capacities. Additionally, OOCL has ordered six 4,500-TEU ships to be delivered in 2009 and six 8,600-TEU vessels — which will be the biggest in the carrier's fleet — to be delivered in 2010-2011. One 2,544-TEU ship was disposed of.
'Last year I noted 2006 as being a momentous year with the sale of the terminals division and a solid result from the group's ongoing business in the face of difficult market conditions,' said OOIL Chairman C.C. Tung in a statement. Last year 'has proven to be equally important, representing a watershed year for the group following the completion of the terminals sale. Key events during the year have been the improved profit from operations in our container transportation and logistics business without the terminals division.'
Tung attributed higher container shipping profitability to carriers' wiser rationalization of capacity.
'A key feature of the container shipping industry in recent years has been the rational allocation of capacity by carriers contributing to lower overall volatility for the industry,' he said. 'With sensible allocation of capacity by the industry continuing in 2007, the stronger sentiment seen at the start of the year translated into maintenance of improving freight rates throughout the year. With overall volume growth and an improvement in freight rates, our ongoing businesses reported an improved performance despite rising costs due to high oil prices.'
Logistics profitability also rose unexpectedly, considering the slowdown in transpacific volume growth.
'For our container transport and logistics businesses, 2007 proved a much stronger year than some were predicting at the end of 2006,' Tung said. 'Despite the U.S. housing sector continuing to slow throughout the year, the effect on global consumption was muted. The slower volume increase to the U.S. West Coast was mitigated by the strong growth of cargo demand from Asia to Europe. Efficient operation of vessels by carriers in reaction to the high cost of fuel also absorbed capacity. Combined, these factors contributed to a much better balancing of supply and demand of capacity than was predicated for the year. With the strong euro likely to sustain the current pace of outsourcing to Asia, and the recently announced fiscal and monetary stimulus measures in the United States, we expect much of the same trade pattern and growth of 2007 will continue through 2008.'