Operators count losses as earnings plunge in maritime sector

New vessel orders drop by 65 per cent

Due to the global economic crisis, many of the operators in the nation’s maritime sector recorded financial losses in the first half of this year. Orders for both new and second-hand vessels have also plunged significantly.

Statistics on business activities for the first half of 2015 and the same period in 2016, showed a change in behaviour for ship owners across the world.

The statistical analysis titled “Changing Behaviours,” issued by Vessels Value, showed that second-hand sales dropped by 52 per cent (from $14.5 billion in 2015) to $7.1 billion in 2016); new building orders dropped by 65 per cent (from 689 vessels in 2015) to 238 in 2016); and demolition sales increased by 10 per cent (from 388 vessels in 2015 to 428 in 2016).

The revelation came as one of the world’s biggest container shipping companies, Maersk Line, reported its first loss since the financial crisis. The company under Danish shipping and oil group, A.P. Moller-Maersk, suffered a net loss of $151 million for the second quarter (Q2) 2016, against $507 million profit for the same period last year.

The group, in its interim financial report, said the Q2 revenue totalled 5.1 billion kroner ($764 million), was down 19 per cent year-on-year 2015. Maersk attributed the losses to a 24 per cent decline in average freight rates, mainly attributable to lower bunker prices and weak market conditions.

Group Chief Executive Officer, Maersk, Soeren Skou, said: “We have had many years in which the capacity of the market is growing faster than demand. Therefore, we have ended up in this situation.”

Also, a terminal operator in Lagos, Sifax Group, recorded between 20 per cent and 25 per cent decline in the volume of operations in the first half of 2016, when compared with the same period in 2015.

Revealing the company’s mid-year business performance at a review session in Lagos, Group Managing Director, Sifax Group, John Jenkins, noted that the period has been a very challenging one for businesses in the country, especially, those with substantial interest in the logistics value chain.

He said: “The previous very stringent control of the foreign exchange regime played a lot of role in the underperformance of various businesses. But things are gradually changing as the effect of the new foreign exchange (forex) policy is beginning to show and we are convinced that the second half of the year will be a lot better.”

Statistics from the Nigerian Ports Authority (NPA) also confirmed that shipping activities in Nigeria are also on a downward trend. In the Q1 2016, a total of 1,131 ocean-going vessels and crude oil tankers with a total gross tonnage (GT) of 59,441,614 called at Nigerian ports.

In the period under review, Lagos Port Complex (LPC) recorded a gross tonnage of 8,195,979, showing a decrease of 11.5 per cent from 9,262,792 gross tonnage achieved in Q1 2015. A total of 296 vessels were handled in the period under review.

Similarly, all other ports, including Tin Can Island, Calabar, Rivers, Onne and Delta, a experienced decrease in operational activities.

The Nigeria Customs Service (NCS) recorded revenue shortfall as it only generated N385.7 billion in Q1 2016, representing a 22.9 per cent short of the N500 billion it was expected to collect during the period.

The amount collected during the period also fell short of the N438.2 billion amounting to a 12 per cent drop year-on-year.

The spokesman for NCS, Wale Adeniyi, said the service generated N197.7 billion from import duties in cash, and N203 million from import duty in non-cash receipts as Negotiable Duty Credit Certificate (NDCC).

Adeniyi attributed the year-on-year revenue loss to economic recession, saying: “Access to foreign exchange and the drastic fall in the value of naira have also affected the service’s revenue generation.”