NOL has reported a loss of $54 million in the second quarter ending June 30, a 55-percent bigger loss than the $35 million loss in the same 2013 period.
Revenue for the second quarter was $2.05 billion, down 1 percent from the same period the prior year.
The company said its container shipping unit, APL, had second quarter revenue of almost $1.7 billion, a 2-percent drop from the same period a year earlier. Volume was approximately 662,000 FEU, down 6 percent, which the company said was due to strict capacity management. The company’s average revenue per FEU was $2,320, a slight increase from the $2,315 recorded in the same 2013 period.
The company said APL made a 29-percent improvement in its before-tax earnings over the same period last year, recording a loss of $29 million, compared with a $41 million loss in the same 2013 period.
APL attributed a 3-percent increase in costs of sales per FEU “largely to a nation-wide trucking shortage in the U.S., port congestion issues in Southern California, as well as empty equipment repositioning costs.“
In a statement, APL President Kenneth Glenn said, “The improvement in our second quarter operating results is significant given that we saw reduced revenue and higher operating costs. We were able to achieve this through our continued focus on lowering fixed costs. “We have now taken delivery of all our newbuildings and are returning more of our less-efficient and expensive chartered tonnage.”
APL said its utilization of ships on headhaul routes was at 95 percent in the second quarter, compared with 90 percent in the second quarter of 2013.
Compared with the second quarter of 2013, APL said these were the conditions in various regional trades in the second quarter 2014:
- Transpacific volume was flat at 194,000 FEU, and average revenue per FEU was down 3 percent to $3,361.
- Intra-Asia volume was down 9 percent to 292,000 FEU, and average revenue per FEU was down 2 percent to $1,430.
- Asia-Europe volume was flat at 101,000 FEU, and average revenue per FEU was up 13 percent to $2,433.
- Latin America volume was down 10 percent to 43,000 FEU, and average revenue per FEU was down 10 percent to $3,089.
- Transatlantic volume was down 22 percent to 32,000, FEU and average revenue per FEU was up 4 percent to $2,771.
Glenn said that there does appear to be some shifting of transpacific cargo to services calling the East Coast rather the West Coast, which some analysts have attributed to concerns about the negotiations for a new contract between members of the International Longshore and Warehouse Union and employers. He said industry-wide, transpacific volumes are up 8 percent on services calling the East Coast, versus 3 percent on services calling the West Coast.
He said profitability in the transpacific trade has been a challenge and that the company has "work to do in further taking out costs, particularly on the fixed cost side to improve that trade's profitability," and that the company is focused on cargo selection and cargo flows, and is reviewing its book of business for both head haul and back haul cargo.
As to the outlook for peak season, Glenn said volumes are “quite good” headed out of Asia for both North America and Europe, but said it was still early to say how things will pan out for the remainder of the year. He said rate increases were taken for both trades on Aug. 1.
NOL’s supply chain management business, APL Logistics, had second quarter revenue of $379 million, a 7-percent increase over the same 2013 period.
“A recovery in the North American automotive sector after a slow first quarter further hampered by severe weather conditions, helped propel its business,” the company said. “At the same time, APL Logistics experienced stable business demand in emerging markets and in Europe.”
APL Logistics President Beat Simon said, “Our strategy to seek growth opportunities in selected industry verticals and attractive markets is on track."