[030520.EN.SEA] ONE Keeps Promise And Sails Into The Black, But Now Faces Virus Challenge

JAPANESE container carrier Ocean Network Express (ONE) has posted a net profit of US$105 million for full-year 2019 after post-merger synergies improved its bottom line.

The Singapore-headquartered company, a joint venture of Japanese shipping company - NYK, MOL and "K" Line - reversed a loss of $586 million in 2018 following a 9.1 per cent increase in revenue to $11.9 billion, as well as further cost cuts.

The shipping company said increased cost efficiency was one of the main reasons behind linking the three container lines, and by the end of last year, it had achieved its target of eliminating more than a million dollars from its combined cost base. Revising variable costs such as inland transport, terminal procurement and container maintenance resulted in a $440 million gain with another $310 million gained through reduced fixed overheads and $300 million saved via network optimisation and bunker cost savings.

Its volume for the year amounted 12.4 million TEU, reports The Loadstar, UK.

ONE's financial year runs April to March and its fourth-quarter liftings - the last three months of 2019 were modestly robust: on the headhaul, eastbound transpacific trade saw it carry 585,000 TEU and achieve a vessel utilisation rate of 92 per cent, while the westbound Asia-Europe trade brought 443,000 TEU with 100 per cent vessel utilisation.

This came despite the initial effects of the Covid-19 pandemic, which ONE said resulted in stagnating volumes and extra variable costs but mitigated by its already reduced fixed cost and stable freight rates. This meant its results were in line with forecasts.

However, for the remainder of year, all bets are effectively off, as lockdowns in across the world's economies have decimated demand.

ONE partner MOL said: "Recent shipments are down by around 10 per cent to 20 per cent. Although ONE has taken measures to flexibly reduce service frequencies, a further significant decrease in cargo trade is anticipated, mainly in Europe and the US, due to sluggish demand."

Source : HKSG / Photo : gCaptain.