Orient Overseas Container Line (OOCL) is going ahead with delivery of 10 new container ships next year, despite the increasingly bleak prospect for the global cargo market.
The line’s chairman Tung Chee-chen agreed things were grim, according to Reuters.
“We will not delay deliveries of ships but the market condition is very bad due to the global economic downturn,” he said. “The outlook is very pessimistic next year.”
The ships being delivered next year, which include two 8,063 TEU vessels and three 4,253 TEU vessels, are 10 of the 20 on order at Hudong-Zhonghua Shipbuilding in China and Samsung Heavy Industries in South Korea.
A number of container lines across Asia are in a similar situation to OOCL, with ships ordered in past, more promising years due for delivery in a cargo market with dramatically falling capacity demand.
One way lines have utilised the increasing ship numbers is with a practice called ‘slow steaming’, where the number of ships on a route in increased, but individual ships slow down for greater fuel efficiency.
“Definitely in the Grand Alliance (Hapag-Lloyd, MISC Berhad, NYK and OOCL) we’re introducing slow steaming, for the cost saving and also environmental factors,” OOCL’s reefer manager Teddy Fung told Fruitnet last week.
“Going from an eight ship loop to a nine ship loop can have significant advantages.”
Mr Tung said the increase in capacity could generate higher revenues, but would probably lower net profits as a result of poor demand.
“The only solution is to fight for some high value cargoes and don’t slash prices for volume,” he said.
OOCL’s revenues rose 21.3 per cent in the first nine months of this year, with an 8.2 per cent increase in capacity to 3.69m TEU.
Its share price, however, has dropped 78 per cent this year, similar to many other shipping lines.
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