ONE reports $4 billion quarterly profit, expects $12 billion for year


Japanese shipping company Ocean Network Express (ONE) has said it expects to post a net profit of nearly $12 billion for its fiscal year ending March 31, 2022, following a $3.5 billion surplus in the previous year.

ONE posted a second-quarter profit of $4.2 billion on a first-half result of $6.76 billion, but said that while cargo demand remains strong, it expects a “volume slowdown” around Chinese New Year and forecasts a second-half profit of $5 billion.

Second-quarter revenue totaled $7.6 billion, up 125% year-over-year, thanks to a 4% increase in shipments to 3.2 million TEUs at an average rate of $2,375 per TEU. This compares with $1,032 per TEU previously.

Apart from a 65% quarter-on-quarter increase in bunker costs to $509 per ton, ONE said its operating costs had increased “due to higher vessel speeds.”

Interestingly, ONE’s average rate for the quarter was almost exactly the same as OOCL’s $2,383 per tonne, disclosed in the Hong Kong-based carrier’s operational update.

Average rates may appear low, given high market rates on some routes, but they reflect comparatively lower rates on backhaul, intra-Asia and other less lucrative routes, along with the extremely profitable Asia-to-Europe and Asia-to-North America routes.

Carriers are gradually terminating their relatively low contractual commitments and replacing them with much higher and longer-term agreements, which, together with a still very high short-term business, is working directly on their bottom line.

It follows that even the $150 billion profit forecast for 2021, recently upgraded by maritime consultancy Drewry, could still prove conservative.

At 32% of its business, transpacific trade remains ONE’s dominant trade, followed by Asia-Europe at 24% and intra-Asia at 21%.

In the second quarter, ONE carried 649,000 teu in Asia-North America traffic, down 15% from a year earlier, which it attributed to port congestion in the Los Angeles and Long Beach hubs.

In contrast, on the Asia-Europe route, the carrier increased its cargoes by 6% to 443,000 teu.

“Like our industry competitors, we could have carried even more cargo had we not been forced to blank so many sailings to Asia due to scheduling gaps resulting from long delays of vessels returning from overseas destinations,” said ONE CEO Jeremy Nixon.

“As things stand, we don’t see any major improvement in the current situation, especially in North America,” he added.

ONE’s fleet has 217 vessels, with a total capacity of 1.6 million TEUs, 55% of which are chartered, putting the shipping line sixth in the carrier rankings, just ahead of Evergreen, which, however, has a much larger order book of 81 vessels for 661,000 TEUs, compared to ONE’s 24 vessels for 322,000 TEUs.

And the shortage of open containerships in the charter market is inhibiting the Japanese line’s growth potential, he says.

“The containership charter market is depleted, so the ability to grow our core fleet in the near term is limited,” Mr. Nixon said.

Source The Loadstar
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