Hong Kong containerline OOCL has set out a path to join the teu millionaire’s club.
Fresh from being taken over by Chinese state-backed maritime giant Cosco, new management was unveiled today at the line’s interim results, where a strategy was revealed to grow OOCL’s fleet by nearly 50% to ensure it crosses the 1m teu mark.
The company’s management, led by new CEO Huang Xiaowen, who also serves as executive vice president at Cosco, said at the company’s interim results press conference that OOCL’s priorities after the takeover would be creating synergies with Cosco in fleet optimisation and procurement.
According to Huang, OOCL is looking to expand its total capacity to 1m teu from the current 700,000 teu in the medium to long term while exploring opportunities in new markets.
The two companies have set up working groups to focus on creating synergies in areas including network optimisation, joint procurement and IT.
OOCL also plans to implement structural adjustments on its fleet, including shedding one of the company’s US west coast routes in August.
“I believe that after OOIL becomes a member of Cosco Shipping, we can effectively combine the respective strengths of OOIL and Cosco Shipping Lines and optimise our global network, thereby achieving greater economies of scale and synergies. This will not only enable both companies to enhance the overall profitability and promote the sustainable development, but will also allow us to offer customers more product choices. They can thus experience our better services,” said Xu Lirong, the incoming chairman of OOIL. Xu is also chairman of Cosco.
OOCL reported a net loss of $10.32m for the first six months of 2018, compared with a profit of $53.6m for the same period in 2017.
“Against the backdrop of a healthy global economy, the industry experienced good levels of cargo growth, and benefitted from moderate improvements in freight rates in many trade lanes. As such, the slow and steady recovery that began in late 2016 continued to provide encouragement to our sector. However, the financial results for the current reporting period reflect not only the positive growth story, but also some of the significant challenges that we have been facing,” said OOIL’s outgoing chairman C C Tung. Tung steps down having served as chairman for the past 22 years. His nephew, Andy Tung, will stay on as co-CEO at OOCL for a 12-month transition period.
Last week Cosco issued a Q&A on its website about how it intends to position OOCL, stressing that line will continue to have a separate identity and structure to its parent under what it described as a “dual-brand strategy”.
OOCL’s current fleet hovers around the 700,000 mark. There are only seven containerlines in the world who have fleets larger than 1m teu.
