Japan's ONE aims for turnaround in 2019 with positive Q1 results
OCEAN Network Express (ONE) expects slightly better profit this year than previously forecast as costs drop one year into its full operation, despite overall demand remaining tepid
OCEAN Network Express (ONE) expects slightly better profit this year than previously forecast as costs drop one year into its full operation, despite overall demand remaining tepid.
ONE, the container ship joint venture of Japan's largest shipping companies, lowered its full-year revenue targets and reduced service in the trans-Pacific shipping market. The shipping line made the forecast as it reported a fiscal first quarter profit of US$5 million, compared to a year-earlier loss of $120 million.
Revenue of $2.87 billion for the quarter ending June 30 was up 39 per cent from a year earlier. ONE credited the profit and revenue rise to higher container liftings, which 'improved significantly with stabilised services', the company said, and the ramp-up of its service in the first quarter of 2018.
ONE saw total container liftings of 1.8 million TEU compared to 1.25 million TEU in the first quarter. Freight rates were up 3 per cent for the Asia-North America trade lane, while the Asia-Europe lane saw no change in rates.
'The freight rate market hovered at the same low level as last year because supply grew faster than demand, though overall demand was relatively strong,' ONE said of the results.
For 2019, ONE said revenue would be lower than previously forecast, $12.4 billion versus an earlier announced $12.7 billion. The company cited a decrease in demand that has occurred in the first half of the year on the major European and North American shipping routes. Overall worldwide demand growth for 2019 will stay around 3 per cent, reports New York's FreightWaves.
ONE said it was able to get better rates on long-term contracts. The company projects a $190 million yearly improvement in results due to better contract rates.
ONE forecasted full-year profit of $90 million compared to an earlier forecast of $85 million. The gain is the result of lower terminal and inland shipping costs.
Service reductions because of weaker growth will also save on operating costs. It reduced trans-Pacific service by 12 sailings in response to weaker demand, while Asia-Europe sailings were reduced by five.