NOL in Exclusive Talks with CMA CGM

APL ship

By MarEx 2015-11-23 16:12:23

Neptune Orient Lines said on Saturday it has entered exclusive talks with France's CMA CGM, the world's third-largest container shipping firm, over a potential acquisition of the Singapore-based company.

Neptune Orient Lines (NOL), controlled by Singapore state investment company Temasek Holdings, said in a statement it had entered the exclusive talks until December 7.

NOL, which has struggled in a prolonged downturn in the global shipping market, said this month it was in preliminary discussions with CMA CGM and A.P. Moller-Maersk.

CMA CGM could not be immediately reached for comment.

There is no assurance that such negotiation will result in any definitive agreement or transaction or that any offer for NOL will be made.

NOL reported a third quarter 2015 net loss of US$96 million, compared to a net loss of US$23 million in the third quarter of 2014. In the third quarter of 2015, APL, NOL’s container shipping business, reported a revenue decline of 29 percent to US$1.2b versus the same quarter last year. 

APL’s average freight rates fell 21 percent amidst pressure from over-capacity in the industry. Volume contracted 11 percent, which APL attributed to various reasons, including a significant drop in U.S. exports and weak demand in the Intra-Asia short-sea market. APL also voided sailings in response to weak global demand and trimmed capacity in unprofitable trade lanes. APL was able to maintain a high headhaul utilization of above 90 percent.

APL stated that it had maintained its rigorous cost management strategy that emphasized network rationalization and better cargo selection. Six chartered ships were returned in the third quarter. As a result, total cost of sales per forty-foot-equivalent unit (FEU) fell by 17 percent year-on-year.