By Mike Wackett (The Loadstar) –
Japanese ocean carrier Ocean Network Express (ONE) reported an operating loss of $248m for the final three months of 2023, which it attributed to lower freight rates and a surge in the delivery of newbuild ships.
But the carrier expects to return to the black in the first quarter of this year, following the huge rate increases seen as a result of the Red Sea crisis.
Despite transporting 3.1m teu, which was 17% higher year on year, ONE’s revenue for its third quarter collapsed by 46%, compared with the same period of the previous year, to $3.4bn, for an ebit loss of $248m and a net loss of $83m.
This compares with ONE’s THE Alliance partner, Hapag-Lloyd, which yesterday reported a preliminary ebit loss of $3m for the quarter. And Hapag’s average rate per teu during the period came in at $1,190, compared with ONE’s $1,081.
“Sluggish consumption growth, a decrease in cargo movement during the low season and an influx of new ships contributed to the further softening of the supply and demand trend and low-level short-term freight rates in the quarter,” said ONE.
It was a view agreed with by its 40% stakeholder, MOL. However, in its outlook MOL said it expected its containership business to “secure a certain profit level, due to the recent situation in the Middle East”.
ONE said in North America, “domestic consumption remained firm”, but had slowed as the slack season began. It added: “In Europe, prolonged inflation has led to a stagnation in personal consumption and, with the additional uncertainty surrounding the situation in the Middle East, cargo movements have not seen a fully-fledged recovery.”
The carrier said low consumer demand was not supporting a strong recovery across its liner trades, adding that it would “take some time to fully recover”.
It said: “Although the supply and demand outlook and freight market conditions are extremely uncertain, ONE will focus on maximising profit by flexible tonnage deployment and efficient equipment control based on demand.”
For fiscal year ending 31 March, ONE is forecasting a net profit of $856m, compared with $15bn in the previous year, boosted by an expected profit of $239m in the current quarter, no doubt due to the huge hikes in freight rates and multiple surcharges as a consequence of the Suez Canal diversions.
CEO Jeremy Nixon noted that the economic outlook for North America and Europe was “starting to look more encouraging” and that “consumer spending has also started to recover”.
Nevertheless, he said, the recent hostilities in the Middle East and the longer steaming diversions via the Cape of Good Hope would “have a material impact on both transit times and the ability to maintain weekly sailing frequencies”.
Mr Nixon made no mention of ONE’s future within THE Alliance following Hapag-Lloyd’s departure in a year’s time. But last week THEA members released a brief joint statement emphasising their “unwavering commitment to maintaining a robust cooperation during 2024”.
According to Alphaliner data, ONE is the sixth-largest container line, with a fleet of 234 vessels and capacity of 1.8m teu, including the final three of six long-term-chartered 24,000 teu vessels received during the quarter and deployed between Asia and North Europe.
It also has an orderbook equivalent to 543,000 teu, including a contract for 12 13,000 teu methanol dual-fuelled ships.
(c) Copyright Thomson Reuters 2024.
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