Quarterly loss at Hanjin as low rates, overcapacity eclipse rising volumes

SOUTH KOREA's Hanjin Shipping has announced a first quarter operating loss of US$11 million despite a robust rise in revenue to $1.9 billion.


"Despite the concern over the traditional slack season, total sales jumped 16.9 per cent year on year recording $1.96 billion due to increased cargo volume. Container division saw 19 per cent revenue increase to $1.61 billion based on 15.6 per cent rise in cargo volume.


Nonetheless, the container division suffered a $28 million loss despite the volume growth, 22.7 per cent up on the transpacific and 23.3 per cent on the Asia-Europe route, and 39.1 per cent more on intra-Asia routes.


Container losses were attributed to the downturn in rates in the Asia-Europe trade, said the company, where capacity expanded and fuel and logistics costs increased.


Of the coming second quarter, Hanjin Shipping said: "Despite the gradual recovery of the global economy and the growing cargo demand towards the traditional peak season we are concerned with the negative impact of the slowing recovery of the housing market and high unemployment rate in the US, increasing capacity in east-west trade and rising oil prices. In this regard, we will concentrate on maintaining profitability by optimising our trade lanes through various cost-cutting measures."


The bulk division achieved an operating profit of $17 million due to the profits in advance with long-term chartering and cargo transport contracts made during the previous market boom as well as 48.7 per cent growth in Contract of Affreightment (COA) cargo volume.


"To minimise the impact of rising fuel prices and capacity increases, we will concentrate efforts on profitability through cost-cutting and reducing risks caused by the uncertainties of business environment," said the company statement.
(Source:http://www.schednet.com)