Singapore's Neptune Orient Lines (NOL) container-shipping arm APL reported its first quarterly profit since 2010 because of higher freight rates and cost-savings, Bloomberg reports.
APL posted core earnings before interest and taxes of US$7m in the three months ended in June compared with a US$53m loss a year earlier, according to a statement.
The group’s logistics division had a US$9m profit on the same basis.
The shipping unit’s average freight rates rose 3 per cent in the second quarter as lines boosted cooperation and ended price wars that caused industrywide losses last year.
“We have seen a steady move up in rates in the second quarter,” APL president Kenneth Glenn told reporters and analysts in Singapore. Rates are still steady and the company may seek increase if the opportunity arises, he said.
NOL’s second-quarter sales rose 8 per cent to US$2.3bn. The company was expected to make a net loss of US$41.1m, based on the average of five analyst estimates compiled by Bloomberg.
The container line used 7 per cent less fuel than a year earlier, even as volumes rose 4 per cent. The unit also saved US$19m in the first half by improving how it returns empty containers to Asia, according to the statement. NOL has also announced plans to sell its Singapore headquarters to raise funds for investments.
The company’s Asia-Europe rates climbed 15 per cent on average in the second quarter, while volumes fell 4 per cent. On Transpacific routes, rates fell 7 per cent and volumes rose 5 per cent.
NOL received six new 10,000-container ships in the first half, with four more to come by the end of the year. It will get 20 new ships next year and four the year after. The tally includes ten 14,000-container ships, half of which will be chartered out to Tokyo-based Mitsui OSK Lines Ltd.
NOL’s fleet totalled 141 ships with a capacity of 630,000 boxes at the end of June. The company has funding in place for all of its on-order ships, said chief financial officer Cedric Foo. Older vessels that will be replaced by the new ships have already been identified, he said.
The shipping line also has “tremendous” flexibility regarding capacity as many charter contracts are up for renewal in the next two years, he said. It has no plans to sell more vessels, he said.