Tue 30 Oct 2012, 09:08 GMT

Shipper announces drop in bunker costs


1.4% decline in vessel fuel costs for ocean shipper.



Hawaii's second-largest ocean shipper, Horizon Lines Inc., has said that bunker costs for its fleet of ships fell by 1.4% during the company's fiscal third quarter ended September 23, 2012.

Vessel fuel costs averaged $649 per metric tonne in the third quarter, down 1.4% from the average price of $658 per tonne for the same quarter in 2011.

Third-quarter net income from continuing operations on a GAAP basis totalled $1.4 million, or $0.02 per diluted share on a weighted average of 90.7 million fully diluted shares outstanding. This compares with a 2011 third-quarter net loss from continuing operations of $111.7 million, or $90.36 per share on 1.2 million weighted average shares outstanding.

On an adjusted basis, 2012 third-quarter net income from continuing operations was $2.3 million, or $0.03 per fully diluted share, compared with net income of $6.1 million, or $4.93 per fully diluted share, a year ago.

Third-quarter operating revenue from continuing operations increased 4.5% to $279.6 million from $267.6 million a year ago. The factors driving the $12.0 million revenue improvement were: a $6.3 million gain in volume; a $5.6 million increase from higher container revenue rates; and a $0.7 million rise from fuel surcharges. These increases were partially offset by a $0.6 million decline in non-transportation services revenue.

GAAP operating income from continuing operations for the third quarter totalled $13.2 million, compared with an operating loss of $99.7 million a year ago.

Container volume for the 2012 third quarter totalled 61,514 revenue loads, up 3.4% from 59,518 loads for the same period a year ago. Unit revenue per container was $4,245 in the 2012 third quarter, compared with $4,171 in 2011. Unit revenue per container, net of fuel surcharges, was $3,218, up 2.9% from $3,127 a year ago. Commenting on the results, Horizon Lines said: "Horizon Lines generated a 3.4% improvement in container volume and a 2.9% increase in container revenue, net of fuel surcharges, for the third quarter, relative to the same period a year ago," said Sam Woodward, President and Chief Executive Officer. "Volume increases in Hawaii and Alaska offset volume weakness in Puerto Rico. However, third-quarter adjusted EBITDA of $27.0 million declined by $6.0 million from a year ago, largely due to $4.6 million of incremental transit and crew costs associated with dry-docking three Puerto Rico vessels in China. We are doing this to facilitate extensive maintenance and high-quality enhancements in the most cost-efficient manner possible in order to improve vessel reliability and service integrity in Puerto Rico.

"Excluding these incremental dry-dock transit and crew costs, the remaining adjusted EBITDA shortfall of $1.4 million reflects a decline in non-transportation revenue, as well as increased maintenance, terminal operations, vessel operating and overhead costs, primarily due to contractual rate increases, port security fees and higher container volumes," Mr. Woodward said. "These negative variances were partially offset by increased volume, associated improved fuel-cost recovery and modest container rate improvements."

"Reviewing each trade lane, Alaska's seasonally strong summer business benefited from increased northbound automobile shipments and southbound seafood volume. Hawaii's positive volume trend continued during the quarter, driven in part by stronger tourism. Puerto Rico revenue container loads contracted on lower volume. Reduced shipments in Puerto Rico were partially offset by stabilizing container rates and increased refrigerated cargo volume relative to a year ago."

Outlook

For the full fiscal year, container volumes are projected to increase slightly from 2011 levels, due to modestly improving economic conditions and consumer sentiment in certain of the company's markets. Container rates, net of fuel surcharges, are expected to rise slightly, mitigating much of the contractual rate increases the company is incurring this year from its vessel union partners, transportation service providers and for other marine services. During 2011, many of the company's union partners and transportation service providers reduced or maintained rate levels to assist the company in its cost-savings initiatives, which included a reduction in non-union workforce.

Fuel prices are projected to remain at historically high levels, averaging $700 per tonne in the fourth quarter and $690-$695 per tonne for the full year.

The company expects cash flow from operations and available cash will be adequate to meet liquidity needs over the next 12 months, and projects total liquidity to approximate $40 million at the end of the current fiscal year.


Maran Melina vessel. Angelicoussis Group takes delivery of fifth dual-fuel Suezmax tanker  

Maran Tankers Management adds the 155,500-DWT Maran Melina to its fleet.

CMA CGM Orsay naming ceremony. CMA CGM takes delivery of LNG-powered Orsay for Asia-Europe trade  

24,212-TEU vessel joins 10-ship series, adding capacity to the carrier's FAL3 route.

Titan Unikum vessel. Titan Clean Fuels completes 15-year survey on LNG bunkering vessel Titan Unikum  

Multi-gas carrier has undergone dry-docking work at a Chinese yard, preparing it for future upgrades.

Aesen 116H vessel. Lehmann Marine’s CUBE battery system debuts in China aboard hybrid crew boat  

German battery maker’s first Chinese installation targets fuel savings on a Cheoy Lee-built vessel for a Singapore operator.

Person signing a document. Iino Lines secures transition loan from Mizuho Bank for LPG dual-fuel VLGC  

Japanese shipowner finances the acquisition of Lumi Aurora through a green transition finance framework aligned with ICMA guidelines.

ABS, HD KSOE and Siemens MoU signing. ABS, HD KSOE and Siemens partner on digital twin technology for ammonia-fuelled ship safety  

Three firms will combine CFD analysis and digital twin technology to assess ammonia leak scenarios in vessel design.

American Bureau of Shipping (ABS) logo. Nuclear-powered LNG carriers cost more upfront but cut lifetime fuel bills, ABS-backed study finds  

Joint study with Blossom Energy examines the economics of a 174,000-cbm LNG carrier powered by a small reactor.

Christos Doulaveris, Flex Commodities. Flex Commodities appoints Christos Doulaveris as general manager for Greece  

Bunker trader strengthens its Greek operations with a new leadership appointment.

Chang Ping Yuan vessel. China delivers first domestically built VLGC under Chinese flag  

Cosco Shipping’s new 88,000-cbm gas carrier features an LPG dual-fuel main engine.

IMO, GreenVoyage2050 and Republic of Türkiye MoTI logos. Electric and hybrid ferries could cut Sea of Marmara emissions by 63%, IMO study finds  

A GreenVoyage2050 study finds that electrification could slash emissions, avoid €492 million in damage costs and support jobs.