Sponsored By

Where next for loss making NOL?

Looking through Neptune Orient Lines (NOL) financial results in recent years it does beg the question as to where the company, and many other large to mid-sized container lines for that matter, are headed in the long term.

Marcus Hand, Editor

May 15, 2014

2 Min Read
Kalyakan - stock.adobe.com

NOL’s financial numbers over the last few years do not make particularly comfortable reading. In the first quarter of 2014 NOL lost $98m, and in the previous quarter it was $137m in the red. Its 2013 full year loss of $76m would have been much worse had it not been for a $200m one time gain from the sale of its headquarters building in Singapore, and in 2012 it lost $412m.

In fact over the five years from 2009 – 2013 NOL has only been in the black for one of them, 2010 when it made a healthy $461m profit. Cumulative losses for the five-year period run to $1.24bn.

The company’s first quarter statement was strong on stressing efficiencies and cost savings, and the delivery of more fuel-efficient newbuildings into the fleet of container shipping arm APL in the coming months was noted. This will certainly help the bottomline given just how much of operating costs are taken up by bunkers. Whether it will be enough to bring operations back into the black is difficult to say but Maersk Line’s 2013 results did underscore just how much difference fuel-efficient tonnage can make to financial results.

However, there is another problem for NOL that is more difficult to address: size and scale. Container line APL is the world’s seventh largest in terms of slot capacity, but this gives it mere a 3.4% share of the global market. By contrast top two Maersk and Mediterranean Shipping Co (MSC) have a 14.9% and 13.5% market share respectively.

Organic growth to achieve a scale on a par with the top two is out of the question. Based on $90m for a 10,000 teu newbuilding (the price Seaspan paid at Yangzijiang Shipbuilding) to simply double APL’s 617,000 teu capacity fleet would cost an astronomical $5.58bn.

Consolidation would therefore appear to be the only option. NOL was among the first movers in consolidation, buying the then American President Lines (APL) in 1997. Since then NOL has been repeatedly linked to number six container line Hapag-Lloyd but nothing has ever transpired. Hapag-Lloyd is now in the process of merging with Chilean line CSAV.

So where does this leave NOL? There are few other possible merger candidates in the market due to ownership structures other container lines which often include either national or family interests. Could it yet join Hapag-Lloyd and CSAV – only time will tell.

Read more about:

APLHapag Lloyd

About the Author

Marcus Hand

Editor

Marcus Hand is the editor of Seatrade Maritime News and a dedicated maritime journalist with over two decades of experience covering the shipping industry in Asia.

Marcus is also an experienced industry commentator and has chaired many conferences and round tables. Before joining Seatrade at the beginning of 2010, Marcus worked for the shipping industry journal Lloyd's List for a decade and before that the Singapore Business Times covering shipping and aviation.

In November 2022, Marcus was announced as a member of the Board of Advisors to the Singapore Journal of Maritime Talent and Technology (SJMTT) to help bring together thought leadership around the key areas of talent and technology.

Marcus is the founder of the Seatrade Maritime Podcast that delivers commentary, opinions and conversations on shipping's most important topics.

Conferences & Webinars

Marcus Hand regularly moderates at international maritime events. Below you’ll find a list of selected past conferences and webinars.

Get the latest maritime news, analysis and more delivered to your inbox
Join 12,000+ members of the maritime community

You May Also Like