Russian sanctions take toll on Suffolk-based container logistics firm OOCL (Europe)

OOCL containers.

OOCL containers. - Credit: Archant

Container logistics company OOCL (Europe) has reported an annual loss of nearly £1m, with the impact of international trade sanctions on Russia adding to a mis-match between supply and demand.

OOCL (Europe), which is based at Levington, near Ipswich, and is part of the Hong Kong-based Orient Overseas Container Line (OOCL), has just filed its annual report and accounts with Companies House.

Turnover for the year to December 31 dropped by 34.5% on a reported basis, from 301.575m US dollars in 2014 to 197.485m US dollars (about £167.934m).

The annual loss before tax of 1.081m US dollars (about £919,300) compares with a pre-tax profit for 2014 of 5.464m US dollars.

In its annual report, the company says that the container shipping business has grown considerable in the past 20 years, with growth in volumes having resulted in the introduction of larger ships in order to achieve economies of scale.

However, it says that customers are well aware of these economies, resulting in downward pressure on freight rates at a time when operators are faced with additional expenditure on vessels and terminal facilities.

The report says that, at the start of 2015, the company benefited from a number of “unforeseen conditions”, including lower fuel costs and better than anticipated momentem in the United States economy, but retail sales, already under pressure, “stagnated further” as the year progressed.

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“Towards the end of the year, the worsening imbalance in supply and demand, driven by large amounts of new tonnage being introduced at a time of volume stagnation and shrinkage in different trades, has had a negative effect,” it says.

“Capacity was taken out of the market as a response to slower demand growth, and having witnessed a substantial fall in rates, the company was forced to surrender most of the benefit of lower fuel prices to customers.”

The company adds that one of the factors behind the sharp fall in demand was the combination of sanctions on Russia, from European Union and non-EU countries, and Russian sanctions on imports from the West, due to the crisis in Ukraine.

OCCL (Europe), a member of the EADT/EDP Top 100 listing of the 100 largest companies based in Suffolk and Norfolk, acts as the European territorial agent for the OOCL group, receiving a commission for each container it handles. It also operates as an international container line carrier for the transport of goods to and from Russia, Poland and Turkey.