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.


GRSE and ONGC contract signing. GRSE signs contract with ONGC to build four hybrid platform supply vessels  

Indian shipbuilder adds offshore support vessels to its portfolio with hybrid propulsion contract for state oil firm.

Felicitas vessel. AMS Barging christens methanol-ready tanker as fleet reaches 17 vessels  

Dutch inland shipping company adds 9,000-cbm diesel-electric tanker Felicitas, designed for future conversion to methanol bunkering.

Estonia's fully-electric ferry render. Steerprop to supply next-generation CRP units for Estonia's first electric ferry  

Finnish propulsion specialist Steerprop will equip a CRIST-built electric ferry with upgraded contra-rotating propeller technology for the Estonian State Fleet.

BGN and HD HHI contract signing. BGN orders four more dual-fuel LPG carriers from HD Hyundai Heavy Industries  

New contract brings BGN's 2026 orders with HD HHI to 10 vessels and will increase its owned VLGC fleet to 23 ships.

Shenghang Yongle ship-to-ship (STS) bunkering operation. World's first ship-to-ship green ammonia bunkering operation completed in China  

Shenghang Yongle supplied 1,000 tonnes of green ammonia to CMB.Tech's Mineral Europa, connecting the fuel's full supply chain.

CMA CGM Lorenzaccio naming ceremony. 15,000-TEU methanol-powered boxship named CMA CGM Lorenzaccio  

French carrier adds literature-inspired vessel to its methanol-powered fleet for deployment on the REX2 service.

China Zorrilla vessel. Battery-electric ferries grow in scale as aluminium multihulls gain market share  

DNV highlights the rise of battery-electric aluminium ferries, spotlighting the delivery of the world's largest such vessel.

Bjorn Hauschild, IBT Bunkering & Trading. IBT Bunkering & Trading appoints Sales Support Specialist  

Björn Hauschild joins from shipyard broker CombiTrade.

Haiyang Shiyou 301 ship-to-ship (STS) LNG bunkering operation. CLPe and CNOOC complete Hong Kong's first LNG bunkering of a pure car and truck carrier  

Ship-to-ship operation delivered around 2,600 cbm of LNG to dual-fuel vessel AICC Fenghuang.

Mercuria logo. Mercuria seeks senior sales and account manager for bunker delivery platform  

Role can be based either remotely or at one of its offices in London, Geneva, Athens or Las Palmas.