[080220.EN.SEA] ONE Expects Quarterly Loss of US$49m But Optimistic of Full-Year Profit

JAPANESE shipping company ONE anticipates a US$49 million loss for the current quarter, on the back of weak demand following the Chinese Lunar New Year. Subsequently, ONE and its member partners of THE Alliance will void more container shipping sailings in the first quarter.

The vessel-sharing group cancelled 12 voyages to Europe and 31 departures to North America in the fourth quarter of 2019, reported UK's The Loadstar.

The merged container businesses of "K" Line, MOL and NYK managed a $5 million net profit in its third quarter ended December 31 2019 on turnover of $2.9 billion, mainly due to a decline in bunker prices to an average of $417 per tonne, as its average freight rates fell on both the transpacific and Asia-Europe trade routes.

ONE forecasts it will achieve a record a full-year profit of $81 million, up $21 million on its previous forecast, and a reversal on the $600 million loss it suffered in the first year of the merged entity.

"Cargo movement has been almost in line with our forecast for east-west trade, north-south trade and intra-Asia until the lunar new year in late January," said ONE.

Furthermore, it said that in December there had been "some cargo rush to avoid the new bunker surcharges," which boosted liftings.

"On the other hand, we expect relatively weak cargo movement after the lunar new year and, accordingly, we plan to have additional void sailings, mainly under THE Alliance east-west trade, in accordance with the demand drop and to reduce operating costs."

ONE's largest shareholder with a 40 per cent stake, NYK, said its liftings had "stagnated" in the quarter, which it attributed in part to slower seasonal demand and to the impact of the US-China trade war.

Indeed, according to ONE's liftings data, in its third quarter it carried 665,000 TEU from Asia to North America, compared with the 746,000 TEU it transported over the same period the previous year.

NYK said: "Freight rates did not rise during the summer peak season and were sluggish. In the third quarter, freight rates deteriorated in both the North America and Europe trades."

ONE noted that, in terms of cost optimisation, it was ahead of forecast, with savings on the empty position of containers and agency overhead cost reductions assisting the bottom line.

Nevertheless, according to ONE's 30 per cent equity owner, MOL, the carrier will also face some additional costs in the current period: "Some costs for reallocating vessels as a result of service restructuring from April."

Commenting on the IMO 2020 low sulphur regulations, ONE reported that there had been a "smooth transition" to the use of low sulphur fuel oil (LSFO) by its ships and said it "expected" to recover the additional cost of the bunker fuel through its OBS (ONE bunker surcharge).

However, ONE appears to have changed its views on the use of scrubbers, and said it now planned to retrofit the exhaust gas cleaning systems on its "core large ships".

ONE is the sixth-ranked global container shipping line with a total capacity of 1,572,000 TEU available on 220 ships, of which 147 vessels are chartered in.

Source : HKSG.