Orient Overseas (International) (OOIL) has announced a loss of US$400.6 million for the year ended December 31, 2009, compared to the profit of US$275.5 million recorded in 2008.
"2009 presented the worst market conditions ever experienced in the container shipping industry," commented C C Tung, the Chairman of OOIL, when announcing the group's 2009 financial results.
"The year opened with a collapse in container freight rates as excess shipping capacity chased a dearth of demand volume. An improvement in freight rates occurred in various trade lanes over the second half of the year as capacity in excess of demand was removed and the first tentative signs of a pick-up in global economic activity were seen. Unfortunately, the second half of the year also saw increases in energy prices."
The company reported a 33 percent decrease in revenue from US$6.5 billion in 2008 to US$4.3 billion in 2009. EBITDA from core operations fell a staggering 115 percent from US$617 million to a negative of US$91 million.
The second half of the 2009 year saw a recovery to revenue, with an eleven percent increase from US$2.065 billion in the first half of the year to US$2.285 billion in the second half.
The container transport and logistics arm of the group, OOCL, suffered a double-digit decline in lifting in the first three quarters, and stabilised to a four percent drop in the last quarter. Overall, 2009 volume was 14 percent lower than that in 2008 and revenue was 33 percent lower.
"The recovery in the global economy and the pick-up in OECD [Organisation for Economic Co-operation and Development] consumer demand are likely to be sluggish," said Mr Tung.
"On the supply side, there continues to be an excess of capacity in the form of outstanding new-build orders and laid-up vessels that will need to be absorbed over the next three to four years. An imprudent re-introduction of capacity currently idling or laid-up, if mismatched to demand, could see fresh rounds of rate cutting.
"The industry's challenge between short-term cash flow and longer-term stability will test the market's capacity discipline over the next couple of years until trade growth eventually absorbs the surplus capacity," Mr Tung continued.
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