Widdows sees good times ahead as NOL returns to profit

SINGAPORE`s biggest shipping company, Neptune Orient Lines (NOL), returned to profitability with earning of US$461 million (S$589 million) for the year ending December 31.

Higher freight rates and rising demand meant NOL`s box unit APL, the world`s seventh-largest container shipping firm, managed to erase a 2009 loss of $741 million.


Group revenue for the year reached a record $9.4 billion as the global economic recovery boosted trade flows. Fourth quarter profit rose to $177 million, from a loss of $211 million in the same period the year before.


The company attributed gains to an improved container business based on higher rates and volumes. Box volumes increased 24 per cent for the full year and 13 per cent for the quarter. Higher demand meant higher freight rates, which led to 22 per cent increases in revenue per box.


NOL said it expects conditions to remain buoyant in Asia. "The rates moderate in many markets in the world. Maybe, the broad intra-Asia rate is an exception, where you have a lot of robust growth - the churn in a couple of the larger domestic economies. But for the mature markets, the growth rates will moderate but will still be five to seven per cent," said NOL chief executive Ron Widdows.


But tensions in the Middle East and a weak US dollar, he said, have been driving up oil prices with Brent Crude at $102 a barrel, which impacts on bunker fuel.


Said Mr Widdows: "The events that have taken place over the last few weeks, the kind of supply shocks, geopolitical events that have transpired in the Middle East, I still see fuel prices hovering at US$85 to US$90 a barrel for some time. But that`s a fairly high cost and that is the impetus behind slow steaming, so anything at that level or above is going to continue to be a cost pressure that will result in slowing down networks globally."