HONGKONG: Orient Overseas (International) Limited, trading as OOCL, has reported a net profit of US$47 million in 2013 – down from US$295 million the previous year.

Gross revenue fell year-on-year from US$6.45 billion to US$6.23 billion due to what the company describes as an "operating environment characterized by muted demand and over-capacity."

Despite acknowledging a market imbalance due to a 5.7 percent increase in overall supply and a 4.2 percent rise in demand, OOCL took delivery of eight 13,208 TEU 'Mega' class new-build vessels and two 8,888 TEU 'SX' class new-build vessels during the year – representing net additional capacity of over 496,000 TEUs.

Group chairman C C Tung commented: "Seaborne trade growth for the liner industry was subdued in 2013. Freight levels were disappointing, especially during the first half of the year. During the second half of the year, both physical cargo movement and sentiment improved, resulting in a slightly better freight market. Although container shipping demand growth in 2013 was lower than earlier forecasts, capacity supply growth was also lower than forecasts which helped contribute to a much needed recovery in rates, albeit mild, during the second half of the year."

Tung said new deliveries last year increased overall market capacity nearly 1.4 million TEUs and their deployment on Asia-Europe routes had a knock-on effect on the trans-Pacific and resulted in considerable excess capacity intra-Asia and on Australasia trades.

Despite a forecast of more over-capacity in 2014, Tung expects a rise in global demand as a result of U.S. growth, the Eurozone recovery on more solid ground, and the continued economic expansion in China and Japan. "Indeed, such development should mean improved outlook for the Transpacific, Asia Europe and intra-Asia trades and more positive results for the industry as a whole," he added.

With an EBIT of US$72 million last year compared to US$3 million in 2012, Tung said OOCL's logistics business, particularly in the areas of international supply chain and import/export services, "will become a meaningful contributor to the group over the long term."

The company claims its Port of Long Beach middle harbour redevelopment project, due for final completion in 2019, will be the most competitive, efficient and environmentally friendly container facility in North America. As of December last year, the shipping group had liquid assets of US$2.4 billion and a net debt to equity ratio of 0.25 – up 13 percent year-on-year.