Singapore's Neptune Orient Lines (NOL) , the world's seventh largest container shipping firm, posted a net loss for the second consecutive quarter and said it expects to report a full-year loss if conditions in the shipping industry do not improve, Reuters reports.The global container shipping sector, which had just begun recovering from its worst downturn in history in 2009 when the recession hit global trade and forced many companies to lay up ships and cut jobs, is facing new challenges from weak freight rates due to inflows of new capacities and soaring fuel costs.
Most of the weaknesses in freight rates are on Asia-Europe routes, where NOL competes with global giants such as Maersk Line, the world's largest container shipping firm.
The head of Maersk recently told a newspaper that container freight rates were very still low on Asia-to-Europe routes because of a glut of capacity entering the market. .
NOL recently signed $1.54 billion deal to order 12 new ships which comprises of 10 vessels of 14,000 twenty-foot equivalent units (TEU) from Hyundai Samho Heavy Industries and two 9,200-TEU ships from Daewoo Shipbuilding and Marine Engineering .
However, going forward NOL hopes the new container ships it has ordered will help to lower their operating costs and give the company a better deal with soaring fuel costs, NOL executives said.
The purchase came after Maersk ordered 10 container ships with a capacity to carry 18,000 TEU containers, the largest type of ship available in the sector, and another 10 similar vessels in options.
NOL, around two-third owned by Singapore state investor Temasek Holdings, reported a $57 million net loss in the second quarter, hit by falling freight rates and soaring fuel price.
This compares to a net profit of $100 million in the year-ago period, but was better than the average of analysts' expectations of a net loss of $62.7 million for the quarter.
Its revenue in the quarter climbed 1 percent to $2.15 billion.
"Conditions are challenging throughout the shipping industry," said NOL chief executive officer Ronald Widdows.
Deteriorating conditions in the global economy were resulting in weakened trade demand and continued pressure on freight rates, NOL said in a statement.
"Unless these conditions improve, NOL will post a full year loss," it said.
Shares of Neptune Orient Lines have lost nearly half of its value so far this year, underperforming the 11 percent fall in the broader Singapore market .
Most of the weaknesses in freight rates are on Asia-Europe routes, where NOL competes with global giants such as Maersk Line, the world's largest container shipping firm.
The head of Maersk recently told a newspaper that container freight rates were very still low on Asia-to-Europe routes because of a glut of capacity entering the market. .
NOL recently signed $1.54 billion deal to order 12 new ships which comprises of 10 vessels of 14,000 twenty-foot equivalent units (TEU) from Hyundai Samho Heavy Industries and two 9,200-TEU ships from Daewoo Shipbuilding and Marine Engineering .
However, going forward NOL hopes the new container ships it has ordered will help to lower their operating costs and give the company a better deal with soaring fuel costs, NOL executives said.
The purchase came after Maersk ordered 10 container ships with a capacity to carry 18,000 TEU containers, the largest type of ship available in the sector, and another 10 similar vessels in options.
NOL, around two-third owned by Singapore state investor Temasek Holdings, reported a $57 million net loss in the second quarter, hit by falling freight rates and soaring fuel price.
This compares to a net profit of $100 million in the year-ago period, but was better than the average of analysts' expectations of a net loss of $62.7 million for the quarter.
Its revenue in the quarter climbed 1 percent to $2.15 billion.
"Conditions are challenging throughout the shipping industry," said NOL chief executive officer Ronald Widdows.
Deteriorating conditions in the global economy were resulting in weakened trade demand and continued pressure on freight rates, NOL said in a statement.
"Unless these conditions improve, NOL will post a full year loss," it said.
Shares of Neptune Orient Lines have lost nearly half of its value so far this year, underperforming the 11 percent fall in the broader Singapore market .