Published March 31, 2009

Four-week container shipping volume falls 21% for NOL

By VINCENT WEE

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THE slide in Neptune Orient Lines' (NOL) container line business continued as it reported a 21 per cent fall in volumes for the four weeks from Feb 7 to March 6, indicating that recovery is not in sight yet for the liner business.

Downtrend: Average revenue per FEU also fell 16 per cent to US$2,382 from US$2,846

NOL said container shipping volumes fell to 137,800 forty-foot equivalent units (FEUs) from 175,200 FEUs in the corresponding period last year. Likewise, average revenue per FEU also fell 16 per cent to US$2,382 from US$2,846.

NOL blamed the volume fall on the continued deterioration in demand for all major trade lanes. Meanwhile, the lower average revenue per FEU was due to declining core freight rates and lower bunker recovery, Singapore's national line said.

Reports last month suggested that some container lines were so desperate they were even moving boxes for the mere cost of bunker and other expenses.

Year-to-date, the picture looks even bleaker for NOL, with volumes plunging 30 per cent to 326,200 FEUs from 464,600 FEUs for the previous corresponding period. Average rates have held up relatively well but are still down 14 per cent to US$2,535 from US$2,935.

Negotiations on NOL's key transpacific trades, which comprise one third of its volume, are ongoing and the outcome of the fierce tussle between freight rates and market share will be a key determinant of NOL's profitability in the quarters ahead. While the line has been gradually increasing its share of volume from intra- Asia trades, the rise in NOL's average freight rates on this trade far lags that on trade to the Americas.

If indications from the container throughput at the Port of Singapore are any guide, with a 19.8 per cent year-on-year drop in February, there are few signs that NOL's fortunes will recover in the near future.

NOL shares closed three cents lower at $1.15 yesterday.