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Ocean Alliance says no to setting up alliance emergency fund: OOIL
HONG Kong's Orient Overseas Container Line (OOCL) has announced that the Ocean Alliance will not follow in the footsteps of rival THE Alliance by setting up an emergency fund in the event a member collapses like Hanjin Shipping.
"In the Ocean Alliance, customers look at the four players and are generally aware of their financial sustainability. We don't have an emergency fund, largely because we don't think we need to have one," said chief financial officer Alan Tung of OOCL parent company Orient Overseas (International) Ltd., reported IHS Media.
OOCL will launch the Ocean Alliance in three weeks with alliance partners Cosco Shipping Lines, CMA CGM, and Evergreen Line. All but one Ocean Alliance shipping line suffered a loss in 2016, apart from the carrier which hasn't posted its financial results yet.
In 2016 OOCL recorded a loss of US$273 million, CMA CGM posted a net loss of $452 million, while Cosco predicts it will clock up a loss of $1.4 billion. Evergreen Line's 2016 results have not yet been reported.
In the wake of the collapse of Hanjin Shipping in August last year, beneficial cargo owners started to scrutinise the financial stability of their carriers more closely, looking not only at profit and loss, but also at debt loads, the strength of support from home governments, and whether they were paying their bills - particularly to fuel suppliers - on time.
In response, THE Alliance members Hapag-Lloyd, Yang Ming, 'K' Line, MOL and NYK Line announced in December they would establish an emergency fund with an undisclosed amount, to help recover stranded cargo if one of the members collapses.
"Customers' reaction to the incident last summer showed a clear demand for such a safety net and the partners of THE Alliance are proud to present the first contingency plan of its kind in liner shipping," said 'K' Line in a statement.
"In the Ocean Alliance, customers look at the four players and are generally aware of their financial sustainability. We don't have an emergency fund, largely because we don't think we need to have one," said chief financial officer Alan Tung of OOCL parent company Orient Overseas (International) Ltd., reported IHS Media.
OOCL will launch the Ocean Alliance in three weeks with alliance partners Cosco Shipping Lines, CMA CGM, and Evergreen Line. All but one Ocean Alliance shipping line suffered a loss in 2016, apart from the carrier which hasn't posted its financial results yet.
In 2016 OOCL recorded a loss of US$273 million, CMA CGM posted a net loss of $452 million, while Cosco predicts it will clock up a loss of $1.4 billion. Evergreen Line's 2016 results have not yet been reported.
In the wake of the collapse of Hanjin Shipping in August last year, beneficial cargo owners started to scrutinise the financial stability of their carriers more closely, looking not only at profit and loss, but also at debt loads, the strength of support from home governments, and whether they were paying their bills - particularly to fuel suppliers - on time.
In response, THE Alliance members Hapag-Lloyd, Yang Ming, 'K' Line, MOL and NYK Line announced in December they would establish an emergency fund with an undisclosed amount, to help recover stranded cargo if one of the members collapses.
"Customers' reaction to the incident last summer showed a clear demand for such a safety net and the partners of THE Alliance are proud to present the first contingency plan of its kind in liner shipping," said 'K' Line in a statement.
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