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OOCL saw its revenue slump 63% in the second quarter, compared with the same period of 2022, but of more concern is the 15% quarter-on-quarter fall in the carrier’s average rate per teu.

OOCL’s operational numbers do not augur well for the upcoming publication of rival ocean carrier Q2 financial results, and suggest that more and more liner services are now operating at a loss.

OOCL’s carryings in Q2 held up well and were in fact 1.3% higher than the previous year at 1,862,120 teu, with Asia – Europe up 5.2% at 423,783 teu, and the transpacific tradelane ahead by 2.1% at 484,932 teu.

However, the carrier’s biggest region, intra-Asia and Australasia, edged down 2.8% to 824,957 teu.

OOCL’s revenue in the quarter came in at $1.98bn, compared with $5.28bn the year before, for an average rate per teu of $1,062, versus $2,874 per teu previously.

Crucially, the overall average rate per teu was 15% below the level earned in the first quarter as long-term contracts were renewed at lower values and spot rates remained stubbornly low.

Nevertheless, OOCL’s average rate on the transpacific in Q2 reflected a relatively modest decline of 8% on the previous quarter to $1,339 per teu, whereas the carrier’s Asia – Europe average rate slumped by 17% to $1,053 per teu.

But there was greater rate erosion on OOCL’s intra-Asia / Australasia sector where the average rate plummeted by 18% to $786 per teu, and on its transatlantic services, which saw a 25% rate collapse, quarter-on-quarter, for an average of $1,830 per teu.

In notes to the operational update, OOCL said that its loadable capacity increased by 8.7% in the quarter, compared to the previous year, but that load factors on its vessels were 5.9% below the utilisation levels of Q1 2022.

According to analysis of carriers’ Q1 earnings, by consultants Blue Alpha Capital, the top container lines cumulatively earned an estimated net $13bn in the first quarter of the year, based on published results and using industry average estimates for carriers that do not reveal their financial results.

This compared to the $59bn total that the consultant calculated the lines accumulated from their networks in Q1 2022.

The sharp reduction in carrier profit margins in Q1, with several lines very close to trading in the red, saw Israeli carrier Zim actually recording a $58m loss for the period.

It follows that the bellwether OOCL Q2 operational numbers could be a harbinger for more carriers to report negative financial results.

Moreover, carriers will come under intense pressure from their shareholders in the coming weeks to stem any losses, by cutting deployed capacity to meet reduced demand.

However, with a record 285,000 teu of newbuild tonnage delivered last month and an estimated 1.2m teu due to be received in the second half of the year, capacity management will need to be radical.

Unless there is a prompt pick-up in demand, The Loadstar expects that carriers will have little option other than to suspend some east – west loops.

In fact THE Alliance members, Hapag-Lloyd, ONE, HMM and Yang Ming, announced today that they were ‘temporarily suspending’ their Asia – US west coast PS5 loop from August, “in consideration of the present market situation”.

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