South Korea’s Hyundai Merchant Marine Co. being groomed as the sea flag carrier after Hanjin Shipping went under on Monday reported an eighth consecutive operating loss in the first quarter of this year, pointing to still-weak demand and higher fuel cost.

Hyundai Merchant Marine said in a regulatory filing in Monday that it posted an operating loss of 131.2 billion won ($116.9 million) on a consolidated basis in the January-March period, narrowing 31.5 billion won in the red figures against a year-ago period. Sales jumped 7 percent to 1.3 trillion won over the same period. Debt was 3.08 trillion won, slightly below its assets of 3.8 trillion won as of the end of March.

Hyundai Merchant Marine has been incurring deficits from the final quarter in 2012. It recovered briefly in the first quarter of 2015, but stayed in the red ever since.

Despite improvements in shipping charges from the third quarter of last year, profit had been hurt by higher fuel cost, it said.

In the first quarter of 2016, Hyundai Merchant Marine transported a total of 958,934 twenty-foot equivalent unit (TEU) - up 37 percent from a year ago. By region, total volume of cargo shipped to the United States increased 41 percent and Asia 62 percent over the cited period.

Operating loss in the first quarter narrowed by 54.9 billion won from the previous quarter thanks to the company’s continued cost-saving efforts, Hyundai Merchant Marine said.

Container division sales in the January-March period increased 22 percent from a year ago although fuel oil cost surged 59 percent over the same period. The company said sales increase despite higher unit cost was a result of its various cost-cutting efforts.

With an increase in container division sales, Hyundai Merchant Marine said that it was able to save $42 per TEU container vessel in terms of cost in the first quarter compared to a year ago and $77 compared to last year’s annual average.

Meanwhile, freight charges that have been unusually low have also increased to some extent after cargo volume of bankrupt Hanjin Shipping Co. was absorbed by other shipping companies.

Yoo Chang-keun, president and chief executive of Hyundai Merchant Marine, raised hope for improvement in earnings in the latter half amid signs of pickup in global commerce. Yoo expected the company would be able to swing back to profit on a weekly or monthly basis in the third and fourth quarters if cargo volume and freight charges increase sharply.

By Kim Jung-hwan

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