oocl container ship

Hong Kong’s Orient Overseas Container Line (OOCL) plans to cut its capacity 20 per cent by the end of 2009 in response to falling demand, and the CEO of parent company Orient Overseas International Tung Chee-chen has forecast years of hard times for the industry if global economic stimulus efforts fail.

OOCL’s operating capacity was 373,096 TEU in the fourth quarter 2008, which according to chief financial officer Ken Cambie would be cut to 364,444 TEU by the end of March and around 337,509 TEU by the third quarter, reported Lloyd’s List.

The line announced on Friday that 2008 profits were almost halved on 2007 levels, dropping from US$553.7m to US$272.3m.

Mr Tung said he expected profits to continue to decline this year. If stimulus packages around the world worked to boost economies, he said there may be a slight recovery towards the end of the year, but cautioned full recovery would take time.

“If there is only a gradual improvement in the global economy during 2010, then it is likely that conditions in the container shipping industry will take longer to improve,” he said.

With new ships still being built from orders placed before the market downturn, Mr Tung said the oversupply of capacity would continue to worsen over the next three to four years, reported the Financial Times.

OOCL would manage the arrival of new ships by returning chartered vessels to their owners, he said.

The drop in traffic has been sudden and severe; in January alone eastbound traffic fell 16 per cent year-on-year, according to Mr Cambie.