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.


Chang Ping Yuan vessel. Cosco Shipping names 88,000-cbm VLGC Chang Ping Yuan with dual-fuel LPG propulsion  

Owner claims 20% CO₂ reduction and Panama Canal compatibility across both lock systems.

World Fuel logo. World Fuel seeks senior marine fuels sales executive in London  

Position requires minimum of 10 years' experience in marine fuels, marine energy, or shipping.

Amogy and LOTTE Fine Chemical MoU signing. Amogy and LOTTE Fine Chemical sign MoU to advance ammonia solutions in South Korea  

Partnership structured around ammonia bunkering, hydrogen refuelling infrastructure, and distributed ammonia-to-power generation.

WinGD X72DF-ME engine render. WinGD wins order for dual-fuel alcohol engines for Polaris Shipping Newcastlemax fleet  

Four-engine order giving shipowner methanol and ethanol fuel flexibility.

Trelleborg Marine and Infrastructure logo. Trelleborg and Simwave launch LNG transfer equipment training programme at Gastech 2026  

New e-learning programme aims to close crew competency gaps as LNG bunkering grows and alternative fuels enter service.

Toho Emerald vessel. K Line names dual-fuel LNG carrier Toho Emerald at Samsung Heavy Industries yard  

174,000-cbm vessel, built for a joint venture with Toho Gas, is due for delivery next month.

Fujin Sailor vessel. MOL names world’s first LNG carrier fitted with wind-assisted propulsion for Chevron charter  

Fujin Sailor is also the first vessel of any type to carry two Wind Challenger units.

Steve Esau, Sea-LNG. SEA-LNG urges EU to protect mass-balance pathway for liquefied biomethane  

Industry coalition warns regulatory missteps could undermine LBM's rapid growth in maritime.

Luxomar delivery ceremony. ESL Shipping completes Green Coaster fleet with delivery of twelfth vessel Luxomar  

Baltic dry bulk carrier has finalised a twelve-vessel plug-in hybrid coaster programme built in India.

Hybrid ro-ro vessel render. Compagnie Maritime Nantaise orders hybrid ro-ro vessel for European space cargo runs  

French shipping company commissions wind-assisted vessel with biofuel capability to serve growing European space industry.