United Arab Shipping annual profits drop
United Arab Shipping Company (UASC) said its profit dropped in 2006 as the industry felt the burden of rising operating costs due to high fuel prices.
"Our profit went down in 2006 compared with 2005. It was a tough year, but under the circumstances we did well," UASC chief executive officer Ken Bloch Soerensen told Gulf News.
Soerensen declined to provide comparative financial figures for the two years.
He said freight rates were not favourable to shipping lines last year as new ships provided more capacity on the East-West trade route.
"It is a global trend. This year also it is going to very tough for the industry. But we could see the market flattening in 2009-10," he said.
Industry sources say there was a slight oversupply because of which freight rates remained stable. The fourth quarter of 2005 saw a decline in freight rates but they had stabilised in the beginning of 2006.
The supply and demand situation was seen as tightly balanced throughout the year.
Profit margins came under more pressure due to high operating costs, inflated by costly bunker fuel.
More container ships are expected to be introduced in the Gulf in next few years.
UASC is scheduled to take delivery of eight new ships from South Korea in 2008. It will use the vessels, each with a capacity of 6800 TEUs (twenty-foot equivalent container unit), to serve the Gulf, Europe and East Asia routes.
Soerensen said the company would not hold back on its expansions plans because of the current downturn.
"We are making long-term investments. During its 30-year lifespan a ship is going to run into different business cycles," he said.
"Our profit went down in 2006 compared with 2005. It was a tough year, but under the circumstances we did well," UASC chief executive officer Ken Bloch Soerensen told Gulf News.
Soerensen declined to provide comparative financial figures for the two years.
He said freight rates were not favourable to shipping lines last year as new ships provided more capacity on the East-West trade route.
"It is a global trend. This year also it is going to very tough for the industry. But we could see the market flattening in 2009-10," he said.
Industry sources say there was a slight oversupply because of which freight rates remained stable. The fourth quarter of 2005 saw a decline in freight rates but they had stabilised in the beginning of 2006.
The supply and demand situation was seen as tightly balanced throughout the year.
Profit margins came under more pressure due to high operating costs, inflated by costly bunker fuel.
More container ships are expected to be introduced in the Gulf in next few years.
UASC is scheduled to take delivery of eight new ships from South Korea in 2008. It will use the vessels, each with a capacity of 6800 TEUs (twenty-foot equivalent container unit), to serve the Gulf, Europe and East Asia routes.
Soerensen said the company would not hold back on its expansions plans because of the current downturn.
"We are making long-term investments. During its 30-year lifespan a ship is going to run into different business cycles," he said.