NOL keeps sailing despite tougher times ahead

They’re waiting for the peak season to arrive.

The shipping line is hopeful on restoring its profitability after their strategy of sacrificing market shares.

NOL is expected to be tossed by freight rates crashing to multi-year lows, most notably on the Asia-Europe lane, but it remains optimistic that it will weather the storm and sail on peaceful waters on their 3Q peak season.

"Supply continues to be an issue with container fleet expected to expand by almost 7% in FY15, while demand growth is expected to be more sedate at 3-4%," a report from DBS said.

"Though bunker fuel prices have declined from US$600/MT in 2014 to about US$350/MT now, liners are increasingly passing on the savings to customers in a bid to win market share," the report added.

Meanwhile, NOL was able to save on costs of about US$223m in 2Q15 because of better network planning, return of expensive charters and a more targeted cargo selection strategy.

Liner core EBITDA margin of 8.3% in 2Q15 is the best in several quarters. With the expected return of nine more chartered-in vessels in 2H15, we can expect further cost reductions to materialise," the report said.