News / Synergies and growing logistics venture help OOCL make a $65m turnaround

Cosco-controlled OOCL has joined the ranks of shipping lines looking to vertically integrate logistics operations into their core container transport activities.

The Hong Kong-headquartered shipping line – of which last year Chinese carrier Cosco bought a 75% stake, but has since been largely run as an independent entity – posted 2018 annual results this week, reporting a 2017 net loss of $10m transformed into a $55m net profit.

Its carryings last year were 6.3% up on 2017 and reached 6.7m, with growth on its main east-west deepsea trades – the transpacific and Asia-Europe – growing by 8.9% and 14.5% respectively.

The carrier said it had seen some $400m in synergy savings, since Cosco became its majority owner, “in a number of areas, including fleet and network planning, procurement, container management, IT, commercial co-ordination and marine operations”.

However, it was also keen to emphasis the achievements of its OOCL Logistics division, in much the same way that peers such as Maersk and CMA CGM have in recent months.

“This growing part of the group provides new business opportunities and diversification, as well as consistent profitability through excellence in customer service, as well as reliability and advanced technological solutions,” it said.

OOCL said: “The company will design and launch more end-to-end services and products, accelerate the development of extended services and endeavour to enhance the capacity in the one-stop transportation services.

“In respect of railway transportation, the company will include more countries in Central and Eastern Europe into the service scope of the China-European Sea-rail Express, focus on integrated logistics solutions, develop more end-to-end customers and complement the advantages of OOCL Logistics, accomplish the design, construction and management of end-to-end service channels and solve the ‘last mile’ problem.”

Liner industry analyst Alphaliner noted that OOCL’s return to profitability was accompanied by an adjustment “to exclude the earnings from its Long Beach Container Terminal, which has been reclassified as a discontinued operation pending its sale”.

OOCL said this should be completed in the next few months.

“2018 saw a strong performance from our terminal in Long Beach. The second phase of the terminal has now been operational for a year, and all those carefully planned designs using the latest technology and the most environmentally friendly techniques have been proven to bear fruit.

“It is public knowledge that we are required to sell our interest in the Long Beach terminal, and we expect to be able to do this within the coming months,” it said.