Neptune Orient posts 4Q loss amid glut of ships, high fuel costs, weak global trade

SINGAPORE - Neptune Orient Lines Ltd., the world's sixth largest container carrier, said Wednesday it had a bigger than expected loss in the fourth quarter as a glut of ships, a surge in fuel costs and waning global trade undermined freight rates.

NOL had a loss of $320 million in the October to December period, reversing from a profit of $177 million a year earlier, it said. Analysts had expected a loss of about $130 million. Revenue in the fourth quarter fell 13 per cent to $2.4 billion.

"The performance of container shipping is disappointing," Chief Executive Ng Yat Chung said in a statement. "We are urgently addressing costs and all other factors under our control to improve our performance."

Higher fuel costs, too many ships and a slowing global economy have hammered the earnings of shipping companies. Maersk Line, the world's biggest container shipping firm, said earlier this week it plans to cut 9 per cent of its vessel capacity on the Asia-Europe trade route.

The slump in global trade and jump in fuel prices has also hit air shippers. Singapore Airlines Cargo said Wednesday it recently reduced its freighter capacity by 20 per cent by reducing the flying hours of its fleet of 13 Boeing 747-400s.

NOL has set a goal of saving $500 million in costs in 2012 as the arrival of new, lighter-weight ships help boost fuel efficiency, Ng said.

"We plan to improve the competitiveness of our liner position in a horrible industry," he said. "It looks like very challenging conditions in the container shipping industry."

NOL had a loss of $478 million for all of 2011 compared with a profit of $461 million in 2010.