Business, Feature, Freight News, Sea

Sluggish Demand Dooms ONE’s Q3 Results

[ February 8, 2024   //   ]

Singapore-based shipping line Ocean Network Express, or ONE, reported a sharp downturn in revenue, earnings and profit for the most recent quarter.
The shipping line saw a third-quarter loss of US$83 million, a significant decrease from the year-earlier quarter’s profit of US$2.79 billion. Revenue fell 46 percent to US$3.36 billion, halving the year-earlier result of US$6.25 billion. EBIT plunged 109 percent toUS$168 million while profit nosedived 103 percent to US$616 million.
ONE, in release its third quarter results for the fiscal year ending April 1, attributed the sharp downturn to “sluggish consumption growth, a decrease in cargo movement during low season, and an influx of new ships contributed to the further softening of the supply and demand trend.”
Third quarter liftings improved 17 percent to 3.1 million TEUs. ONE said freight rates improved in December 2023, but remained sluggish for the quarter.
In North America, domestic consumption remained firm consistent with the previous quarter, but marine cargo movements slowed as the low-season began, ONE said.
For the full fiscal year ending March 30, ONE anticipates a profit after tax of US$856 million, compared to US$15.billion in fiscal 2022, as low demand means a longer recovery.

Services, Orderbook

Eastbound Asia-North America liftings and utilization rates dipped between the second and third quarters, but the recent quarter’s liftings of 653,000 TEUs increased 13.1 percent year-on-year due to continued U.S. consumption levels. and 94 percent utilization improved from the third quarter of 2022.
ONE has rerouted Asia-North America and Asia-Europe services to avoid Red Sea attacks. Due to the Panama Canal drought conditions, ONE rerouted some of its Asia-North American East Coast services to the West Coast via the Cape of Good Hope. Some Asia-Caribbean and Asia-South America East Coast services via landbridge in Panama.
Asia-North America westbound third-quarter liftings improved 10 percent from the year-earlier quarter to 382,000 TEUs, and rose and 18 percent from Q2 2022 while utilization remained at 90 percent.
ONE took delivery of three vessels out of six long-term-chartered 24,000-TEU vessels from Shoei Kisen Kaisha Ltd. They will be deployed in the Asia-Europe trade. It also took delivery of one 15,000-TEU and two 7,000-TEU vessels on long-term charter from Seaspan in November. ONE also completed acquisition of TraPac LLC, Yusen Terminals LLC and Rotterdam World Gateway in November and added a West India-North America service.

Green Initiatives
Environmentally, ONE signed a shipbuilding contract for a dozen 13,000-TEU methanol dual-fueled vessels in December, as part of the carrier’s ONE Green Strategy to reach net-zero by 2050.
In January, ONE announced the reward of “approval in principle” for a 3,500-TEU ammonia-fueled vessel, jointly developed by ONE, Nihon Shipyard Co. Ltd. and classification society DNV. The joint development project was established in 2022.
In studying the feasibility of ammonia as an alternative fuel, ONE participated in a Global Center for Maritime Decarbonization-led ammonia bunkering pilot safety study.
“Ammonia is definitely one of the primary focuses of our research as ammonia fuel has a great potential of generating lower GHG emissions than conventional marine fuels,” said Koshiro Wake, senior vice president of ONE’s Corporate Strategy & Sustainability Department.
ONE also announced a trial of wind propulsion devices in partnership with Econowind.

ONE is developing a 3,500 TEU ammonia dual-fueled vessel with Nihon Shipyard Co. Ltd. and classification society DNV. (PHOTO: Nihon Shipyard Co. Ltd.