OOIL rejects merger option as it unveils loss for 2016

OOCL Loading containers

Hong Kong listed Orient Overseas International Limited, unveiled a net loss in 2016 of US$219m, compared to a profit of US$284m in 2015. But the parent company of Orient Overseas Container Ltd remains defiantly independent in the face of rumours earlier this year that it would merge with a competitor.

“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,” said OOIL chairman C C Tung.

During the period under review revenue fell to US$5.3bn from US$5.9bn in 2015. Liftings increased to 6.08m teu from 5.576m teu in the previous year, and the overall load factor rose to 85% from 82% previously.

“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,” added Mr Tung.

Looking to future prospects Mr Tung said the supply and demand balance will still be one of the largest risk factors. “Expectations for net growth in 2017 improvemnet in the situation, but time may be needed to absorb the existing overhang,” noted Mr Tung

“We are delighted to be forming the Ocean Alliance with COSCO, CMA CGM and Evergreen. The Ocean Alliance will begin operations in April 2017. 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,” Mr. Tung noted.

“Our 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. 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,” Mr Tung concluded.

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