NOL sinks deeper into the red as losses balloon to US$96m in Q3

Extremely low freight rates are to blame.

Temasek-owned container shipping company Neptune Orient Lines reported substantially larger losses from July to September this year, as weak global trade demand led to a steep contraction in freight rates.

NOL's net loss swelled to US$96m in Q3, a huge leap compared to a loss of just US$23m in the same period last year. The group also posted a core EBIT loss of US$66m this quarter, compared to positive core earnings of US$21m in the same period last year.

"The absence of the traditional third quarter peak season in Europe and North America led to severe freight rates erosion in major trade lanes," said NOL Group President and CEO Ng Yat Chung.

APL, NOL's core container shipping business, reported an 11% contraction in freight volumes and a 21% drop in average freight rates. The weaker performance was attributed to a "significant" drop in US exports, as well as weak demand in intra-Asian trade.

“Freight rates are expected to remain under pressure due to persistent overcapacity and weak trade growth. The Group will continue its focus on cost efficiency, as well as yield and network capacity management,” NOL said in its financial statement.