ONE Returns to Profitability
Japanese carrier Ocean Network Express (ONE), the joint venture that operates the merged container ship businesses of NYK, MOL and K Line, reported Thursday that it has returned to profitability. The line posted a positive result of $121 million for the quarter ending September 30, marking a major upswing from the $192 million loss it recorded during the same period last year.
ONE suffered significant setbacks in its first year of operation due to difficulty integrating its three constituent companies' booking systems and operations. According to NYK, ONE's largest shareholder, liftings and slot utilization fell after the new carrier's launch; although circumstances improved over the course of the year, it was not enough to offset early losses. ONE posted a steep full-year loss of about $580 million, and NYK responded internally by replacing its chairman, president and representative directors.
To turn around its operations, ONE has cut its costs by reducing fuel consumption, optimizing its cargo portfolio and cutting overhead. It has suspended one Asia-USEC rotation and is deploying smaller ships for its Pacific South West service rotation until next March. On the revenue side, it says that it has improved liftings and utilization relative to last year's levels. Utilization on its core Asia-North America routes was about 95 percent in both directions for the quarter, a strong result when compared with last year's levels.
The outlook for the next three months is not as positive: ONE expects that deteriorating spot rates and slowing global trade will lead to a $66 million loss for the next quarter, reducing its full-year profit forecast to $60 million. This prediction assumes that it will have enough pricing power to recover extra IMO2020-related fuel costs from its customers via an additional bunker surcharge.