CP SHIPS “COUNTERS TOUGH MARKET CONDITIONS”
CP SHIPS “COUNTERS TOUGH MARKET CONDITIONS”
CP Ships said that it has dealt with a difficult market during 2002, and will improve its profit results this year.
Ray Miles, chief executive officer of CP Ships, described the year 2002 as being characterized by “one of the worst industry downturns ever” and a time when other major container shipping lines reported heavy losses.
“Throughout the year, we took steps to reduce operating costs and counter the effects of strong competition and excess capacity in key trade lanes,” Miles wrote in the company’s annual report, just published. The group’s cost per TEU was cut by 5 percent to $1,206 per TEU in 2002, from $1,271 in 2001.
However, CP Ships’ full-year net income declined to $52 million in 2002, from $66 million in 2001, as freight rates fell. The Canadian group posted a first-quarter loss in 2002, its first quarterly loss in a decade, but recovered in subsequent quarters.
In April 2002, Lykes Lines, TMM Lines, the Grand Alliance and the COSCO/”K” Line/Yang Ming/Hanjin Shipping alliance reduced their combined ship capacity in the United States/North Europe trade. “This has improved our capacity utilization and helped reverse a steady decline in transatlantic freight rates that began in early 2001,” Miles said.
CP Ships is the parent company of Lykes Lines, TMM Lines, ANZDL, Canada Maritime, Cast, Contship Containerlines and Italia. In 2002, the CP Ships group carried 2 million TEUs for the first time, of which more than 80 percent in North American imports and exports.
This year, CP Ships expects an increase in volume and a “modest” improvement in freight rates, but fewer cost saving opportunities and higher fuel costs.
Miles warned that the current year will undoubtedly “bring its competitive and economic challenges.”
“But we face the next upturn in the industry cycle with confidence and expect to increase profits over last year,” he added.
CP Ships predicts that its 2003 operating income will be higher than 2002’s $83 million, but below 2001’s $139 million.