ONE Books Large Loss for First Year in Operation
The Japanese carrier Ocean Network Express, better known as ONE, announced Friday that it sustained a loss of $586 million for its first full year in operation. The magenta-branded operator manages the merged container fleets and ocean freight businesses of NYK, MOL and K Line, and its launch was hobbled by booking problems.
NYK, which owns about one-third of ONE, booked a loss of $237 million in its liner segment. The firm cited "a service disruption that occurred immediately after the start of the business." According to NYK, liftings and slot utilization fell at ONE's launch, and although circumstances improved by the summer, it was not enough to offset early losses. "In addition, NYK Line incurred significant one-time costs mainly in the first quarter following the termination of the container shipping business," the carrier said.
In response to the underperformance of its liner segment and losses in its air cargo business, NYK changed its chairman, president and representative directors at a board meeting Friday. The line predicts a turnaround and a total profit for fiscal 2019 in the range of $230 million.
For its part, ONE predicted that its profits would recover in the first half of the year, with volumes increasing back to the levels the three carriers experienced before the integration of their operations. According to a presentation by K Line, ONE plans to take in $400 million more in revenue through improvement of liftings and utilization, plus another $270 million through better freight rates and a new bunker surchage. It intends to save $260 million by optimizing its products and reducing fuel consumption, another $190 million through optimization of its cargo portfolio, and $50 million from reduction in overhead. Altogether, the additional revenue and savings are expected to reverse 2018's losses and offset new costs, like rising bunker prices due to the IMO 2020 sulfur rule.