HONG KONG's Orient Overseas (International) Ltd (OOIL) posted a 32 per cent first half net profit increase to US$239 million, drawn on revenues of $3.03 billion, which fell 6.6 per cent year on year.

"With idling ships reactivated and newbuild capacity delivering, freight rates moved rapidly downwards, forcing margins to narrow," said OOIL chairman CC Tung. 

"The industry experienced a volatile period during the first half. In the second quarter demand growth was less than satisfactory especially that of Asia Europe," he said. 

OOIL's principal holding is Orient Overseas Container Line (OOCL), whose first half liftings and revenues were wholly negative year on year. Profit gains were made from property and lower fuels cost from the global oil glut.

Transpacific liftings were 4.5 per cent down in the first half to 616,307 TEU, and on the Asia-Europe route, liftings were 3.4 per cent lower to 464,335 TEU; on the transatlantic route, liftings were down 7.5 per cent to 180,175 TEU while on the intra-Asia/Australasia route, liftings were 0.3 per cent down to 1,479,874 TEU, for an overall decline of 2,740,691 TEU, down 2.3 per cent in the first half.

First half transpacific container revenue was down 2.6 per cent to $948,879 while sales fell 15.5 per cent to $496,317 on the Asia Europe route. Sales fell four per cent to $286,025 on the transatlantic and were down 5.4 per cent to $1,030,415 on the intra-Asia/Australasia route for an overall 6.4 per cent first half decline to $2,705,802,

Said Mr Tung: "In the earlier months of 2015, the industry enjoyed a relative stable freight market. Through the combination of the normal seasonal cargo rush prior to Chinese New Year, capacity constraints arising from port congestion and disruptions in the US, and an improving cost structure created by lower oil prices, the industry made meaningful gains. 

"Oil prices have remained benign since the sharp drop in third quarter 2014. Despite some upward movements of oil price in the second quarter this year, the prospect of oil reverting to the highs of 2013 and 2014 seems increasingly unlikely," he said.

The average price of bunker recorded by OOCL in the first half of 2015 was $352 per ton compared with US$595 per ton for the corresponding period in 2014, generating a decrease in fuel costs of 38 per cent.

"The industry faces a large orderbook in the year 2015. Until sustainable demand growth is achieved, freight rates will continue to be under pressure," he said.

"This could hardly be more evident than it was. Looking into the second half and into next year, the industry takes comfort that scheduled new deliveries are relatively limited in 2016, and is hopeful that cargo growth, especially in Asia Europe and intra-Asia, will recover," he said.

"The first half of 2015 was satisfactory for OOIL. The group remains mindful and cautious, however, of the over capacity that is especially serious in 2015. 

"The industry is hopeful that positive trade growth, especially in the transpacific and transatlantic trades, and to a degree in the intra-Asia trade, will provide support to the underlying market," said Mr Tung. 

"The world economy is on a more positive trajectory now. With more sustainable recovery worldwide, a more favourable supply and demand balance in 2016, and better alliance cooperation dynamics, the container transport industry should find itself in a more positive operating environment looking into next year." 

Alan Tung, the group's acting chief financial officer, said: "The group continues to have sufficient borrowing capacity and remains comfortably within its target of keeping a net debt to equity ratio below 1:1."