ONE reports $120 million loss in first quarter

New Japanese container carrier still expects to achieve profit of $110 million in current fiscal year.     The newly formed container carrier Ocean Network Express (ONE) and the three Japanese shipping companies that formed it — NYK, MOL and “K” Line — all have reported a loss in the first quarter of their current fiscal year, which began April 1 and runs through March 31, 2019.
    ONE reported a loss of $120 million in the first quarter on revenue of $2.066 billion.
    The company attributed the loss “mainly to lower lifting caused by operational teething problems that affected service quality during the operation start-up period and higher bunker price than originally forecast.” (The company previously had forecast average bunker prices of $383 per metric ton in 2018, and it is now forecasting a price of $454 per metric ton for the year.)
    ONE is still forecasting a profit of $110 million for the full 12 months ending next March 31, but has reduced its revenue projection from $13.16 billion to $12.25 billion.
    “Considering that service quality has already stabilized, overall business is expected to be back to a normal situation from the second quarter onwards,” said ONE. It said its unchanged profit forecast of $110 million is “underpinned by steady realization of integration synergy ahead of schedule as well as the change in accounting for lease contracts while higher bunker price will have a negative impact. The profit from overseas terminal business will only be included from the fourth quarter due to a delay in business transfer.”
    ONE has said it expects to achieve integration synergies of $1.05 billion per year as a result of NYK, MOL and “K” Line combining their liner operations.
    It said those synergies are “steadily emerging” and expects to see them ahead of schedule — 80 percent in the first year of operation instead of the 60 percent it originally expected to achieve by March 31, 2019.
    ONE said it carried 530,000 TEUs of containerized cargo on the Asia-North America eastbound transpacific trade route in the first quarter.
    “Both demand and supply are expected to grow by around 6 percent on a year-on-year basis. Major alliances have already announced their service rationalization plan, and it is expected that demand and supply situation will be stabilized.”
    ONE said its headhaul transpacific business only achieved 73 percent utilization in the first quarter, but said utilization in July is expected to improve to 90 percent and that it forecasts utilization will recover back to the level of its original outlook from the second quarter onward.
    From Asia to Europe, ONE said it carried 312,000 TEUs in the headhaul westbound trade in the first quarter. Utilization also was only 73 percent in the first quarter.
    ONE said from Asia to Europe, “supply has grown by 5 percent on a year-on-year basis. The demand growth has not matched the supply growth so far, but a steady cargo growth is expected towards the cargo peak season.”
   It said utilization in July is expected to improve to 92 percent and said it forecasts utilization will recover back to the level of its original outlook from the second quarter onward.
   At the end of the first quarter it was operating a fleet of 230 ships with capacity of about 1.56 million TEUs.
   Last week ONE took delivery of the second in a series of seven 14,000-TEU ships being built by Imabari Shipbuilding in Hiroshima. The new ship, ONE Minato, will be deployed in ONE’s EC4 transSuez service between Asia and the U.S. East Coast.