Hong Kong container ship owner Orient Overseas Container Line (OOCL) has looked to play down the positive market sentiment of recent weeks in results issued on Friday.
The shipowner said the conflicting positive and negative signals that have made forecasting so difficult in the past 12 to 24 months remain firmly in place.
“Certainly, the market is very far from being in disaster territory and, of course, there are some indications that demand is improving and that shipping companies are behaving rationally in the face of fluctuating demand — all of this is reassuring,” OOCL said.
“However, undeniably, there are risks associated with the impact of inflation and higher interest rates on consumer spending, and from the unclear economic outlook.
“There is also the uncertainty of not knowing exactly what the net fleet growth, in terms of effective capacity, will be in the coming months and years.
“No one can predict with accuracy the extent to which, in any given period, capacity from new deliveries will outpace the loss of capacity driven by scrapping and speed reductions, whether for CII/EEXI compliance or simply for cost reasons.”
OOCL said its ships are currently sailing full on its main long-haul trade lanes and are forecast to continue to be fully loaded in the coming weeks.
“US west coast rates have indeed risen, as one might expect at this time of year,” it said. “Similarly, Asia-Europe rates are currently holding and in some trade lanes increasing. Nonetheless, a cautious outlook is appropriate, given the challenges and uncertainties that abound.”
OOCL’s comments come as the Hong Kong-listed shipowner posted an 80% decline in 2023 first-half profit to $1.1bn from the $5.6bn seen a year ago.
“As was clearly to be expected, the extraordinary market conditions of the past two to three years came to an end,” OOCL said.
“The long, steady decline in freight rates, which began around the middle of last year, continued during the first half of 2023.
“The fall from the great heights of 2020 to 2022 has certainly been spectacular in terms of both absolute dollar value and in terms of percentage, but this is simply a reflection of just how high the freight market had risen.”
Container liftings were largely unchanged from a year ago at 3.6m teu, reducing by just 1%, while total revenue decreased by 60%, which resulted in a 60% drop in revenue per teu.
On a positive note, the average price of bunkers recorded by OOCL in the first half of 2023 was $609 per tonne, compared to $729 per tonne for the corresponding period in 2022.
The total bunker cost decreased by 17% in the first half of 2023 compared to the same period in 2022, even though the consumption of bunkers was nearly the same in both periods.
