Analyst: OOCL rates up 4%, volume down 3%

Container volume for Orient Overseas International. Ltd., the parent company of ocean carrier OOCL, was down 3 percent in the fourth quarter of 2008, but rates on its global services increased by an average of 4 percent during that time, according to a report Thursday from JP Morgan analyst Johnson Leung.

   Though rates fell substantially in the Far East/Europe trade for OOCL, they didn’t drop as much as the industry average, and the carrier was able to make up for slashed rates in that trade by attracting increased rates in other trades -- most notably on the transpacific, where rates went up 21 percent in the last quarter compared to the same period in 2007.

   Leung said that OOCL’s inevitable drop in freight rates between the Far East and Asia was 24 percent, much lower than the industry-wide fall of 60 percent to 70 percent.

   OOIL also seemed to have avoided some of the 20 to 30 percent freight rate cuts started end of November in the transpacific trade, Leung wrote. The industry references were made to the port-to-port freight rates but OOIL's average freight rates may contain a fair amount of added value services that give them a bigger denominator to reduce the change percentage. But OOIL’s cargo focus and long-term relationship with its clients may have helped.

   Rates also increased by 8 percent on the transatlantic while volumes were exactly even with the fourth quarter of 2007.

   Meanwhile, volume dropped 4 percent in the fourth quarter, compared to the same period in 2007.

   Part of the volume drop was done via a significant capacity cut in the transpacific and Asia/Europe-Mediterranean trade, but part of it was from a generally weak demand, particularly from U.S. and Europe, Leung said. The 3 percent (year on year) drop in the intra-Asia trade came as a surprise, which we believe was from the long-haul Far East-Middle East trade.

Source: America Shipper