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.


Singapore waterfront skyline. PetroChina seeks LNG bunker trader to expand Asian marine fuel business  

Role requires five to ten years of commercial experience in LNG, bunker trading, marine fuels, commodities, or energy trading.

Shanghai–Melbourne Green Shipping Corridor (GSC). Shanghai and Melbourne ports move green shipping corridor into delivery phase  

Ports launch implementation plan targeting green methanol, biofuels and shore power by 2035.

Dominik Schneiter, WinGD. WinGD CEO warns of mounting cost due to Net Zero Framework delay  

Dominik Schneiter says shipping's fossil-fuelled newbuild boom shows the cost of the IMO's delayed climate policy.

Jessie Maersk vessel. Maersk Tankers names second gas carrier in South Korea  

Jessie Maersk, built to carry LPG and ammonia, joins a ten-ship series as the company expands its gas-shipping business.

Rudi Holtbecker, WinGD. WinGD signs ten-year service deal for six COSCO LNG carriers  

Swiss firm to provide global service and maintenance support for six LNG carriers powered by its 6X72DF dual-fuel engines.

MPA and CCS sign MoU. Singapore and China Classification Society deepen maritime ties with renewed decarbonisation pact  

MPA and China Classification Society renew MOU, widening cooperation on green fuels, smart ships and talent development.

HMM and HD Hyundai Heavy Industries (HD HHI) contract signing. HMM orders eight LNG dual-fuel container ships in newbuild push  

South Korean carrier commissions 13,000-TEU vessels from HD Hyundai, with deliveries due to begin in 2029.

Keel-laying ceremony of vessel with builder's hull no. S1125. CIMC SOE advances construction on three LNG bunker vessels  

Chinese shipbuilder progresses three bunker vessel projects in the same week.

Verde Marine Energy (VME) logo. Verde Marine Energy adds two staff as it expands bunkering operations in ARA region  

Dutch bunker supplier hires former Melroh Trading employees and launches RMG 380 3.5% HSFO barge service following Sunoco Marine tie-up.

Fund for Energy Efficiency Technologies (FEET) signing ceremony. Fund for Energy Efficiency Technologies finances first wind-assisted propulsion projects with Eastern Pacific Shipping  

GCMD and AIM Horizon Investments link verified fuel savings to financing for two EPS vessels fitted with wind-assisted propulsion.