News / More blank voyages as ONE expects a slide back into the red

Japanese carrier ONE has forecast a $49m loss for the current quarter, blaming weak demand following the Chinese new year.

To mitigate the soft booking outlook, ONE and its member partners of THE Alliance will blank further sailings in Q1.

The vessel-sharing group cancelled 12 voyages to Europe and 31 departures to North America in the final quarter of last year.

The merged container businesses of K Line, MOL and NYK scraped a $5m net profit in its third quarter (to 31 December) on turnover of $2.9bn, largely due to a fall in bunker prices to an average of $417 per ton, as its average freight rates declined on both the transpacific and Asia-Europe routes.

Notwithstanding the negative trend in its second half year of trading, ONE said it still expected to record a full-year profit of $81m, up $21m on its previous forecast, and a considerable improvement on the $600m loss 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.

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

But it added: “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% stake, NYK, said its liftings had “stagnated” in the quarter, which it blamed in part on a seasonal slower demand, but also on 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 746,000 teu it transported in 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% 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 LSFO (low-sulphur fuel oil) by its ships and said it “expected” to recover the additional cost of the bunker fuel by way of its OBS (ONE bunker surcharge).

However, ONE appears to have changed its stance on the use of scrubbers, and said it now planneds to retrofit the exhaust gas cleaning systems on its “core large ships”.

ONE is the sixth-ranked global container line with a total capacity of 1,572,000 teu available on 220 ships, of which 147 vessels are chartered in. It does not have any ships on order.