Hong Kong, August 24, 2023 — Orient Overseas (International) Limited (OOIL), the parent company of OOCL, reported a substantial 80% decline in its net profits for the first half of this year. The Hong Kong-listed company’s net profits stood at USD 1.1 billion, marking a sharp drop from the corresponding period in 2022. While the company refrains from disclosing quarterly figures, the contrasting financial performance has garnered attention.
In the six-month period, OOIL witnessed a year-on-year decline of 1% in liftings, amounting to 3.6 million twenty-foot equivalent units (Mteu). The average freight rates per twenty-foot equivalent unit (teu) also underwent a noticeable shift, plummeting from USD 2,874 the previous year to USD 1,158. The downward trajectory in freight rates was partially offset by a 17% decrease in bunker costs compared to the previous year.
Despite the challenging financial figures, OOIL, under the ownership of COSCO, boasts of possessing one of the most resilient financial stances within the industry. The company’s net cash, signifying a surplus of cash over debt, stands firmly at USD 6.2 billion. Furthermore, its cash and bank balances reach USD 7.8 billion before considering debt obligations. This robust financial position offers a protective buffer amid the uncertainties prevailing in the maritime sector.
While recent weeks have exhibited a more positive sentiment in the shipping landscape, OOIL remains cautious about forthcoming market conditions. Especially on routes directed towards the US West Coast, rates have shown signs of recovery and, in some instances, even surpassing pre-COVID-19 levels. However, OOIL emphasizes the inherent unpredictability of the interplay between new delivery-induced capacity expansions and capacity reduction due to scrapping and speed reductions, attributed to either Clean Maritime Shipping Standards (CII/EEXI) compliance or cost-efficiency motives.
The intricate balance of these factors makes it challenging to precisely ascertain the extent of capacity fluctuations in any given timeframe. This prevailing uncertainty underscores the prudent approach taken by OOIL despite the recent upturn in market dynamics.
In a shipping industry characterized by its volatility and susceptibility to multifaceted influences, OOIL’s financial resilience and cautious outlook position it to navigate the ever-changing tides with measured confidence.
