NOL’s small ships no match against industry behemoths in transpacific profit race

It might lose its spot as one of the top liners.

Neptune Orient Lines relatively smaller ships are no match against the larger, more efficient vessels that its competitors are using on the same routes.

A report by DBS Vickers analyst Suvro Sarkar noted that NOL appears to be lagging in the arms race as more liners queue up for ultra-large containers with sizes of around 20,000 TEU. In contrast, NOL’s biggest ships are in the 14,000 TEU range.

“As industry behemoth Maersk Line has repeatedly shown, bigger and more efficient ships are the only way to ensure profitability amidst the structural decline in freight rates,” Sarkar wrote.

He added that while NOL is reducing costs by returning expensive charters, it is also conceding market share and could lose its status as one of the world’s top 10 liners.

“With an improved balance sheet following the divestment of the logistics business, we believe it could position for new orders in future but risks being late to the party,” he said.