Weakening Asia/Europe market hits Senator Lines’ operating result
Senator Lines, the Bremen-based ocean carrier subsidiary of Korea’s Hanjin Shipping, Thursday said its operating result before taxes slumped 22 percent in 2005 to 47.4 million euros ($60.8 million) from 60.6 million euros in 2004.
It also warned that lower freight rates in its core Asia/Europe trade threatens to reduce profits further.
The carrier has space on 17 regular services and carried 671,000 TEUs in 2005, up 4.7 percent on the 641,000 TEUs handled in the previous year.
Senator Lines’ operating costs in 2005 rose 10.5 percent, including a 45 percent hike in fuel costs and a 9 percent rise in terminal rates.
The German carrier said 2005’s results, which were up 76 percent over 2004, were “exceptional.”
“Our result for 2005 means we are back to normal,” said Hans-Herman Mohr, Senator Lines’ chief executive officer. “But we continue very safely to be well in the black.”
Senator Lines reported a 95 percent average utilization ratio for westbound voyages on the Europe/Far East and Canada routes, and “maintained its ground with a very good utilization ratio” on eastbound sailings.
Mohr added that freight rates in the Asia/Europe market have dropped substantially following the rash of acquisitions and introduction of new and larger tonnage towards the end of last year.
“Developments in our Europe/Asia services since mid-2005 are depressing our forecast for this year. The paradox of strong demand and full ships on the one hand, and a highly critical slump in rates on the other, can only be solved if all carriers, both global players and specialists, pull together as one and return to the strong ground of a sensible pricing policy.”
Despite the softer rates, Mohr confirmed that the company will continue its policy to focus on Asia/Europe services, after it pulled out of all trades calling at the United States in 2003.
“We expect in particular that China’s importance in international trade will increase to an extent which will enable us to expand our market position,” Mohr said.
“Along with cost positioning, a central aim of our activities in this increasingly difficult environment is once again a significant rise in our service quality.
“We agree with those experts who, in face of ever larger — and ever fewer — global players, predict excellent opportunities for specialized carriers to score well in quite particular fields: reliability, data quality, and individual customer service. We are working on this more than ever,” he said.