Digital Edition

November 12 2018

Issue link:

Contents of this Issue


Page 5 of 55

6 The Journal of Commerce | November 12 2018 Spotlight Container volumes no guarantor of profits Container shipping lines' performance during the third quarter peak season likely will determine whether carriers will add a second consecutive year of profitability to the $7 billion earned in 2017 aer a generally dismal first half. But as previous financial results have shown, even significant increases in revenue and volume don't guarantee a positive result. Orient Overseas (International) Ltd., parent company of OOCL and subsidiary of Cosco Shipping, was the first of the major carriers to release its third- quarter performance in an operational update following a $10.3 million loss in the first half of 2018, down from a $53.6 million profit a year earlier. Although OOIL gives no profit and loss numbers in its interim updates, the debilitating effects of rising operating costs and weak freight rates are visible in the average revenue earned per container. In the third quarter across its four major trades, OOIL reported that the overall average revenue per TEU inched up a scant 0.1 percent compared to the third quarter of last year. This was despite a 10.4 percent jump in volume on the Asia-Europe trade, and a 7.3 percent rise on the trans-Pacific compared with the same period last year. Volume also rose 6.6 percent on the intra-Asia/Australasia trade, OOCL's largest lane. This has placed greater importance on third-quarter results that ultimately will determine whether carriers report an annual profit or loss. Of the carriers that report earnings, other than Wan Hai, which reported a profit of 262 million New Taiwan dollars ($8.5 million), Maersk was the only other carrier to report a second-quarter profit ($26 million), albeit one achieved through discontinued operations. Ocean Network Express (ONE) said in its half-year earnings report that it collectively expects to lose $310 million in the first half of the year, on revenue of $5.03 billion. The full-year expected loss of $600 million is over revenue of $11 billion. If carriers' schedule reliability in September is anything to go by, it shows that shipping lines are placing capacity management above all else following the loss-soaked first half. September 2018 continued a trend of "absolutely abysmal schedule reliability," according to the latest analysis of carrier performance by SeaIntelligence Consulting. Seven of nine months in 2018 recorded the lowest global schedule reliability of each month compared to the 2012-2017 range, the analyst noted. "What the numbers do tell us is that the poor reliability is industrywide, as the 15 global carriers all recorded schedule reliability within the 51 to 73 percent range in September, so it is not a question of a few carriers dragging down the industry average. Nearly all carriers are down over last year," SeaIntelligence noted.nesletter. The Journal of Commerce Executive Editor, The Journal of Commerce and JOC Events: Chris Brooks 609 649 2181, Executive Editor, The Journal of Commerce and Mark Szakonyi 202 872 1234, Managing Editor: Barbara Wyker 908 507 4802, Senior Editors: William B. Cassidy Trucking and Domestic Transportation 202 872 1228, Bill Mongelluzzo West Coast 562 428 5999, Hugh Morley Northeast, Mexico 646 679 3475, Eric Johnson Technology 213 444 9326, Janet Nodar Breakbulk and Heavy Li 251 473 2742, Greg Knowler Europe +44 7976798770, Turloch Mooney Global Ports +852 9011 9109, Associate Editor: Ari Ashe Southeast Ports, Intermodal Rail 202 548 7895, Web Editor: Joseph Lazzaro 917 309 0148, Data Analyst: Marcin Lejk +44 58 741 62 70, Shipper Engagement Manager: Dustin Braden 646 679 3450, Senior Content Editor: Alessandra Gregory Barrett, 860 248 5238 Senior Designer: Sue Abt, 862 371 3534, Designer: Bryan Boyd, 908 910 7849, Publisher: Tony Stein, 770 295 8809, Sales: Cindy Cronin, Strategic Account Manager Southeast, Gulf, Canada sales, 954 551 8305 Jean Gibbons, Senior Sales Executive West Coast, Midwest sales, 706 469 7160 Ria Van den Bogaert, Sales Representative Europe, Middle East sales, +32 2 569 8905 Alex Remstein, Associate Sales Specialist Reprints/Classifieds/Copyrights, 646 679 3418 For Magazine Subscription Customer Service: 450 West 33rd St., 5th Floor, New York, N.Y. 10001 800 952 3839 Executive Director, Editorial Content, Maritime & Trade, IHS Markit, Peter Tirschwell Executive Director, Media & Events, Maritime & Trade, IHS Markit, Amy Middlebrook Manager, Production, Carmen Verenna Product Manager, JOC, Jesse Case ©2018 The Journal of Commerce — All Rights Reserved For more information, visit our website, Shutterstock

Articles in this issue

Links on this page

Archives of this issue

view archives of Digital Edition - November 12 2018