Horizon Lines in the red after huge price-fixing fine

Horizon Lines swung to a loss in the fourth quarter after a large legal settlement cut into a bottom line already hurt by volume and fuel-price troubles, reported Dow Joones Newswires.


The result came a week after the container-shipping and intermodal-transportation company agreed to plead guilty to charges of conspiring to fix rates and surcharges for marine freight transportation over a six-year period. The company will pay a US$45 million fine, according to the US Department of Justice.


Horizon also disclosed plans to split the roles of chairman and chief executive, cancelled its dividend and said it is in talks with some lenders to avoid a default under its financial covenant as its seek new long-term financing.


Shipping companies of all types saw demand recover last year after the economic downturn pushed down rates and increased excess capacity, but Horizon has recently reported declining volume and weaker margins.


Container volume rose 7.9 percent in the fourth quarter from a year earlier. Container rates, net of fuel, edged down 0.7 percent on pricing pressure from Puerto Rico, where the Department of Justice alleged the company had been fixing rates.


"The fourth quarter turned out to be very challenging, due to lower-than-anticipated volumes in Hawaii, particularly in the latter months of the quarter, increased fuel prices, continuing rate pressures in Puerto Rico, and anticipated start-up costs related to our new China service," chief operating officer Brian Taylor said.


Horizon reported a fourth-quarter loss of US$52.7 million compared with a prior-year profit of $1.33 million. Revenue increased 4.2 percent to $298.8 million.
(Source:http://www.cargonewsasia.com)