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The Brani container terminal, Singapore. Neptune Orient Lines (NOL) posted a first-half loss on high fuel prices and lower revenue per container shipped. REUTERS/Vivek PrakashVIVEK PRAKASH/Reuters



Singapore's Neptune Orient Lines on Friday produced some of the clearest evidence so far that container shipping faces a renewed downturn when it reported a $67-million (U.S.) first-half loss and warned it could lose money over the year as a whole.

NOL's announcement came after Germany's Hapag-Lloyd, another major operator, announced a sharp fall in first-half profits on Thursday and warned that in the short term, industry profitability would suffer from high fuel-oil prices and declines in revenue from each container movement.

NOL, whose APL shipping line operates the world's seventh-largest container fleet, is closely watched because it gives far more detailed information about trade volumes and revenues than its rivals and is widely regarded as well-run.

Demand to ship containers sheds light on key parts of the global economy, since it is the principal means of moving manufactured and semi-finished goods long distances.

The first-half loss compared with a $1-million net profit in the first half of 2010, when container shipping was starting a rapid recovery from 2009, the first year in the industry's history to see a global decline in trade volumes. This year's figure was struck on revenues up 9 per cent to $4.6-billion.

NOL said a 3-per-cent fall in revenue per 40-foot equivalent unit (FEU) – a standard container-size measurement – to $2,570, and a 23-per-cent year-on-year increase in fuel costs, had outweighed the effects of an 8-per-cent rise in container volumes.

Ron Widdows, NOL's chief executive officer, said conditions were challenging throughout the shipping industry.

"In this environment we are working aggressively to bring down costs while keeping our assets well-utilized," he said.

The container shipping industry, like many other shipping segments, is suffering from the depressing effect on rates of the delivery of large numbers of new vessels ordered before the 2008 financial crisis.

Revenue in the core APL container shipping business rose 7 per cent to $4-billion for the half, while the business's losses before interest and tax (EBIT) were $61-million, against $13-million profit for the same period last year. Core EBIT at APL Logistics, the group's logistics operation, rose 22 per cent to $33-million, on revenue up 18 per cent to $682-million.

On future prospects, the company said deteriorating global economic conditions were weakening trade demand and exerting continued pressure on freight rates.

"Unless these conditions improve, NOL will post a full-year loss," it said.

NOL's figures were announced after the Singapore Stock Exchange closed.

The figures from Hapag-Lloyd, operator of the worlds' fifth-largest container ship fleet, gave a similar picture to NOL's. The shipping line, partly owned by Germany's Tui, announced a fall in EBIT of 81 per cent to €42.1-million ($60-million U.S.) for the first half. It gave no overall revenue figure.

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