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ONE Reels In Profit for Third Consecutive Quarter

ONE Reels In Profit for Third Consecutive Quarter
Ocean Network Express, the merged container shipping business of Japanese trio NYK Line, K Line and MOL, reported USD 5 million profit for the 3rd quarter of its 2019 fiscal year, remaining in the black for three consecutive quarters.

ONE made an upward adjustment of the full-year forecast to a profit of USD 81 million, marking an improvement of USD 21 million from the previous forecast.

“Cargo movement has been almost in line with our forecast for East-West trade, North-South trade and Intra-Asia trade until Lunar New Year in late January. In December, there was also some cargo rush to avoid new bunker surcharge and that sustained cargo movement. On the other hand, we expect relatively weak cargo movement after Lunar New Year, and accordingly, we plan to have additional void sailings, mainly under THE Alliance for East-West trade, in accordance with demand drop to reduce operating cost,” the company explained.

Commenting on ONE’s performance, NYK said that liftings particularly increased on the major North America and Europe trades, as well as the Intra-Asia trade. However, in the third quarter, liftings stagnated as a result of seasonally slower demand and the impact of the trade problem between the US and China.

Although freight rates were higher in the first and second quarters compared to the same period of the previous fiscal year in the North America trade, in the Europe trade, due to deterioration in the supply and demand balance, freight rates did not rise during the summer peak season and were sluggish, the company explained.

In the third quarter, freight rates deteriorated in both the North America and Europe trades compared to the same period of the previous fiscal year.

ONE added that the optimization of its cargo portfolio is improving its profitability and is going as planned at the beginning of 2020. Further progress is being marked in operation efficiency, and cost-saving through business process rationalization, aimed at bolstering ONE’s competitiveness.

As informed, its bottom line was further lifted by optimization of empty containers positioning as well as the lower price of heavy fuel oil than forecasted.

Given the said improvements, the teething problems from the previous fiscal year, and large one-time costs remain a thing of the past.

“As a result, although revenue declined year on year in the liner trade as a whole, the business performance greatly improved, and a profit was recorded,” NYK said.

 

The container shipping major claims that it had managed to secure a relatively smooth transition to IMO 2020 regulation with the procurement of regulation-compliant fuels in advance and micromanagement of vessel operation.

“We plan to retrofit scrubbers on board core large ships as scheduled. We are studying the expansion of target vessels, monitoring industry trends as well as the best mix of procurement of regulation-compliant fuels and retrofitting of scrubbers,” ONE noted.

As announced earlier, the company’s extra bunker cost by MARPOL2020 compliance is expected to be recovered through bunker surcharge.

ONE said that it expects the regulation-compliant fuel price after January to be almost in line with the previous forecast.

Finally, the container shipping heavyweight is maintaining its synergy targets of 96% for the fiscal year of 2019 and 100% for the fiscal year of 2020.

 

 

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