The Hong Kong-based container and bulk shipping company reported a net loss of $40.2 million in the first six months of 2016 as revenues slid 20.5 percent to $385.8 million compared with the same 2015 period.
Sinotrans Shipping Ltd. reported a net loss of $40.2 million in the first half of 2016 compared with a loss of $18.3 million the previous year, according to the company’s most recent financial statements.
The Hong Kong-based container and bulk shipping company posted a diluted loss per share of $1.01 in the first six months of the year compared with $0.46 per share in 2015 as revenues slid 20.5 percent year-over-year to $385.8 million.
Sinotrans attributed the loss primarily to a lagging global economy that “dragged forward in uncertainty and instability.”
“The balance between supply and demand kept tilting under the context of sluggish world trade growth caused by depressed overall demand on one side and increasing fleet capacities on the other side,” the company said. “The international shipping market has further depressed compared to 2015, evidenced by the unprecedented historical low market index of the dry bulk shipping market and container shipping market.”
Revenues from Sinotrans’ container shipping unit in the first half slipped 5.7 percent year-over-year to $223.3 million, while revenues from the dry bulk shipping fell 34.3 percent to $162.8 million and revenues from other business segments plummeted 62.8 percent to $573,000.
In the container shipping market, overall demand remained weak due to slowing global economic growth and sluggish world trade, according to Sinotrans.
Group container volumes fell 3.9 percent to 406,476 TEUs in first half 2016, while average income per TEU dropped 5.5 percent to $396 compared with first half 2015.
The company noted that although market capacity has decreased from 2015 levels, freight rates continued to fall due to a fundamental imbalance of supply and demand. The average of the China Containerized Freight Index’s (CCFI) Composite Index for the first half of the year totaled 696 points, a year-over-year decline of 29 percent and a record low.
“Nevertheless, the supply-and-demand in the Intra-Asia market maintained relatively stable,” it added. “The drop of freight rates was smaller than those of the major routes such as the European and the American. In particular, freight rates of the China-Japan route only decreased 5.9 percent year-on-year, which was far less than that of the drop of CCFI Composite Index.”
The company said the overall dry bulk market remained weak in first half 2016 despite a rebound in prices of major commodities in the second quarter.
Bulk shipping volumes stood at 20.47 million tons during the first six months of the year, down 2.4 percent from 2015. The verage daily charter hire rate/time charter equivalent (TCE) rate of dry bulk vessels plummeted 39.1 percent to $4,947.
“The increase in Chinese imports of major commodities in the first half year provided support for the dry bulk shipping market to some extent,” it said. “However, the imbalance of supply-and-demand aggravated by the continued slouching overall global seaborne demands and increasing fleet capacities has pushed the dry bulk shipping market index further to its historical low, while the index has been at its low level in recent years.”
Sinotrans noted the Baltic Dry Index (BDI), a commonly used measure of the dry bulk shipping market, hit a historical low of 290 points in February 2016, and the average BDI stood at 486 points in the first half of 2016, a year-over-year decrease of 22 percent.
“More dry bulk shipping enterprises were forced to restructure their debts, sell assets and even go bankrupt, which evidenced how depressed the market was,” the company added.
Sinotrans said the weak demand in the container and bulk markets was offset in part by a reduction in operating costs. Total cost of operations for the first half of 2016 fell 18.1 percent to $413.7 million compared with the same 2015 period.
Sinotrans losses widen in first half 2016
