Orient Overseas slumps to first-half loss

Slowing demand, oversupply of ships and low freight rates drove Orient Overseas (International) Ltd to an attributable loss of US$15.26 million during the first half of the year.

Ship supply will still outstrip demand next year despite a rebound in freight rates, the world's largest shipping firm said.

Chairman Tung Chee-chen said in a filing with the Hong Kong stock exchange yesterday that he expected margins to remain thin and volatile in the next two years, as the industry still faces growth of 21 per cent in capacity between now and 2015.

The global container trade's average annual growth will rise just 5.5 per cent in the five years to 2017, the International Monetary Fund forecast in January.

But Alan Tung Lieh-sing, the group's acting chief financial officer, said OOIL will face overcapacity of only 7.2 per cent next year, against forecast demand growth of between 4 per cent and 7 per cent over the same period. He said oversupply will decrease further to 3.5 per cent in 2015.

"We will maintain our competitiveness by providing the right tonnage and services," he told reporters. "For our vessels, that is achieved by controlling both size and efficiency. If that can be achieved by obtaining new builds, we will not be held hostage by financing."