The loss last year compared to a $283.9m profit in 2015 while revenue fell 11% to $5.3bn from $5.95bn in 2015.
Like others in the industry OOCL was hard hit by the weak freight rate environment. “This past year has seen some of the most difficult markets in our industry’s history. A combination of steady but low growth in most regions and an overhang of excess supply built up in recent years led to extremely challenging conditions in many trade lanes for most of 2016,” said OOIL chairman CC Tung.
“As fuel prices rose in the second half of the year, industry performance was badly affected by freight rates that frequently sank below the levels seen in 2009,” noted Tung.
The group's container transport and logistics business as a whole turned in a pre-tax loss of $184.6m. Container line only liftings rose 9% to 6.1m teu and load factor rose to 85% but at the cost of lower revenue as revenue per teu plunged 19% to $774 from $951 previously, resulting in an 11% fall in revenue to $4.70bn for the segment. This is the lowest revenue per teu recorded by OOCL in recent years, falling below even the low point of $924 per teu seen in 2009.
Meanwhile net capacity increased 2.3% to 574,318 teu and is set to grow even more this year as OOCL starts to take delivery of its six 20,000 teu newbuildings from May.
Pointing to the source of the problem, OOIL cfo Alan Tung noted that with 73% of the line's revenue coming from the Intra-Asia/Australia and Transpacific trade lanes which faced relatively tougher challenges in 2016, OOCL was disproportionately more affected by the weak volumes there.
Looking ahead, the cfo said signs of improving economic data and consolidation within the industry were good signs but global GDP growth still remained uncertain and a strong supply overhang remained.
He pointed out that with OOCL's entry into the Ocean Alliance, of which it is a founding member, its Asia-Europe and transpacific capacity share will go up to 35% and 41% from 18% and 33% respectively when it was with the G6 alliance previously. "We do look forward to 2017 because of this," noted Alan Tung.
"We are delighted to be forming the Ocean Alliance with Cosco, CMA CGM and Evergreen... Working together with these sizeable and like-minded partners will enable us to continue to offer the highest standards in the most cost-effective manner," said CC Tung.
"Moreover, the Ocean Alliance enables OOCL to grow its business in a considered and measured way,” he concluded. This was echoed by the cfo in response to questions on mergers and acquisitions involving OOCL, where he noted that "scale is important but it's not everything".
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