Singapore-based container shipper Neptune Orient Lines (NOL Group) reported negative net profits for their third consecutive year today with losses of US$76 million. This was however, an improvement over a terrible 2012 where the company lost USD $412 million, and an even worse 2011 where they lost $474 million.
A highlight of the year, at least from a financial standpoint, was the sale of their corporate headquarters in Singapore which gave them a non-recurring gain of $200 million.
NOL reports that through a continued focus on operational efficiency and cost management, they have reduced their operating costs by almost $1 billion over the past two years. This cost reduction involved a number of different initiatives including:
- Larger & more fuel-efficient vessels
- Slow Steaming
- Minimizing empty box repositioning
- Improved cargo planning to reduce terminal handling lifts
- Pre-emptive voyage planning to avoid slowdowns from bad weather
Overcapacity of the container shipping sector continues to put downward pressure on NOL however. Group CEO Ng Yat Chung notes that while new tonnage continued to be delivered to this industry, “freight rates declined through the year, with the fourth quarter recording one of the lowest levels the industry has seen in the last three years.”
NOL added 24 new ships to their fleet in 2013 with another 10 due for delivery in 2014 which they note “will replace 20 smaller vessels on expiring charters.” In 2013, 11 new vessels replaced 8 older/smaller ships which were sold and/or scrapped, and 5 ships were returned post-charter. The 10 ships due for delivery in 2014 include four 14,000 teu and six 9,000 teu vessels.
In their earnings presentation, NOL notes emerging markets led the company’s growth in 2013, up 14% year-on-year in Asia/Middle East