ONE set for singularly awful first year with $600m loss

Carrier consolidation can prove tricky as evidenced today with news of a massive revision of projected earnings from Japan’s Ocean Network Express (ONE). The carrier, the merged liner divisions of Mitsui OSK Lines (MOL), Kawasaki Kisen Kaisha (K Line) and Nippon Yusen Kaisha (NYK), officially started operations on April 1, the start of the Japanese financial year, and is now on course to be one of the worst performers among all global box carriers in 2018.

MOL, K Line and NYK were all forced to revise downwards their own full year financial projections today on the worse than expected news coming from the magenta-branded ONE, the sixth largest carrier in the world with a fleet totalling 1.54m slots.

ONE, led by Jeremy Nixon in Singapore, is now forecast to make a full-year loss of $600m, a dramatic revision from earlier forecasts of a $110m profit.

In a release, ONE stated liftings and utilisation dropped in the first half of the financial year due to the impact of “teething problems” immediately after the commencement of services in April of this year. Booking reception and documentation operations were delayed when operations kicked off on April 1 because ONE staff were not completely familiarised with the newly introduced IT system, and the staff were “short-handed”.

“ONE sought to regain lost ground during the peak season from July to September, but liftings and utilization remained lower than the outlook because the negative impact remained on its main Asia-North America routes and Intra-Asia routes,” the carrier stated. The liner was also hit by the higher costs of returning containers brought on by decreased liftings on backhaul voyages.

ONE claimed today that its teething problems have now been resolved.

Commenting on today’s revised forecast, Lars Jensen from Copenhagen-based SeaIntelligence Consulting, told Splash: “ONE’s downwards adjustment is indeed dramatic and does from the outside resemble what happened to Maersk Line after the integration with P&O Nedlloyd where integration issues similarly led to significant problems and loss of profitability. A projected loss of $600m is indeed severe, as this almost equals the combined loss for the liner segments of NYK, MOL and K Line in 2016 when the market last hit the bottom.”