The line’s average rate per teu plunged 21.2%, compared with the same period of 2015.
The Hong Kong-based carrier recorded a 16.9% decline in revenue on H1 2015, at $2.25bn, despite a 5.5% improvement in liftings, to 2,890,208 teu.
Next month, along with most of its peers, the carrier’s parent, OOIL, will report its H1 financial result, but given the dramatic plunge in turnover, versus the teu count, the numbers are unlikely to be especially cheering for investors.
OOCL recorded a full-year net gain of $284m last year, however profit slumped to $45m in the second half of 2015, as trading conditions deteriorated.
OOIL chairman CC Tung said in April that the carrier had “a history of solid financial performance as well as a robust balance sheet”, and “a long track record of outperforming the market, in both up and down cycles”.
Tradelane carryings in H1 2016, compared with the same period of the previous year, improved by 14% on the transpacific (702,728 teu), by 7.7% on the transatlantic (193,973 teu) and by 4.5% on its busiest routes, intra-Asia/Australasia (1,546,112 teu).
However, on Asia-Europe, the carrier saw its liftings drop by 3.6% on the previous year, to 447,395 teu, as the G6 alliance blanked and suspended sailings.
On the revenue front, OOCL’s H1 earnings from the troubled Asia-Europe tradelane plunged 28.6%, on 2015, notwithstanding the supposed GRI-boosting effect of cancelled sailings on the supply/demand imbalance.
One of the reasons for OOCL’s relative past success is that, in contrast to many of its ocean carrier rivals, only around 15% of its carryings come from the Asia-Europe route, rendering the carrier less affected by the intense “race-to-the-bottom” rate wars in recent years.
However, the intra-Asia/Australasia tradelanes, which account for over 50% of OOCL’s liftings, have also come under severe rate pressure this year, with revenue sliding by 14.7% to $1.55bn in H1, compared with 2015, despite a liftings increase.
Of particular concern for OOCL’s management will be the average freight rate slump of 21.2% on the first six months of 2015, reducing the container line’s average rate per teu to $778, versus $987 the year before.
And, factoring in the steady rise in the cost of bunker fuel this year, the combination of lower rates and higher costs is likely to exert more pressure on the carrier’s bottom line as the H1 interim results are finalised.
Moreover, OOCL faces another eight months within the G6 alliance, before it joins the Ocean Alliance. This is bound to result in transitional costs well into 2017 as the new alliance beds in, making it imperative for OOCL that it succeeds in hiking its rates to sustainable levels in the next months.