Check out what's really bugging NOL's shipping activity

Looks like NOL must rethink the measly 0.4% and 18% drop in freight rates.

According to Macquarie Securities Research, NOL’s margin underperformed in 2010-2011 due to high costs. NOL’s container operating margin has been below the industry average for the past two years i.e. it underperformed in both the upturn in 2010 and the downturn in 2011. While NOL’s revenue structure meant that it was less exposed to the spot market upswing in 2010, it should have performed better than the sector in 2011 as its realised freight rates were more stable than spot.

Here's more from Macquarie Securities:

Revenue is not the problem at NOL. Even though rates have been volatile for the past two years, we believe NOL’s underperformance is in large part due to its high cost base as realised freight rates have actually held up remarkably well during the downturn. NOL’s average rate for Transpacific and Asia-Europe was down by just -0.4% and -18%, respectively, in 2011.

NOL has embarked upon a major shipbuilding program that will change the structure of its fleet. After adding 10x10,000 TEU ships this year, NOL will have another 10x14,000 TEU vessels (5 of which are chartered out to MOL) and 12x9,000TEU vessels delivered to its fleet in 2013 and 2014. We believe the company’s cost base will be substantially lowered after the fleet renewal program is completed for two reasons: 1) Lower operating lease payments; 2) Lower the age of total fleet and unit cost per slot.