'Freefalling' Asia-North Europe rates shed half their value in three weeks
Container spot rates from China to North Europe are in freefall with average rates dipping ...
By Mike Wackett
Japanese ocean carrier ONE recorded a net profit of $944m for its third quarter, October-December, and expects to see profits of $2.5bn for the full year.
That would represent an astonishing 172% upgrade on its November guidance, thanks to huge hikes in freight rates hitting the carrier’s bottom line.
Moreover, it would appear that ONE is being conservative with its $900m net profit Q4 forecast for January to March, given the impact of even higher rates well into this quarter.
Q3 revenue for the merged container business of K Line, MOL and NYK surged by 29%, compared with Q3 19, at $3.76bn for an ebitda of $1.3bn and an ebit of $1.04bn.
ONE does not release data on its total liftings, but on the main Asia-US and Asia-Europe headhaul routes it did revealed it carried 730,000 teu and 402,000 teu respectively during the period, achieving over 100% utilisation on both trades, due to its deployment of extra loaders.
Based on its own freight index, set at 100 in 2018, ONE’s average rate per teu in the quarter stood at 125 percentage points for Asia-Europe westbound, and 140 Asia-US eastbound, compared with just 98 and 104 for the same quarter of 2019.
ONE attributed the “significant” increase in profits to the “sharp recovery in cargo demand and increases in the short-term freight market”, adding: “During Q3, global container volumes surged due to inventory restocking, with a strong demand for consumer goods and medical products.”
The carrier also said that it had benefited from a reduction in bunker price from $417 to $314 per tonne.
“The resurgence of Covid-19 has led to labour shortages and operational restrictions in many locations, which has resulted in port congestion and longer port stays, due to lower productivity and heavy rail and truck traffic,” said ONE.
It had chartered additional ships and deployed extra sailings in order to recover schedule integrity and to “rescue rolled cargo”.
ONE also said it had “ordered a large number of containers” to phase into its network to mitigate the impact of equipment shortages, in addition to deploying sweeper vessels to reposition boxes back to Asia.
In December, ONE signed a letter of intent with compatriot shipowner Shoei Kisen Kaisha for a 15-year charter of six newbuild scrubber-fitted 24,000 teu ULCVs for delivery in 2023 and 2024.
Currently ONE is the sixth-ranked container line by capacity, with a fleet of 224 ships and an operating capacity of 1.6m teu.
ONE’s 30% equity holder, MOL, said the carrier had “achieved a significant increase in profit” from “historic rate levels” which it expected to continue.
“Despite some anxiety over a decline after China’s lunar new year holidays, it is anticipated that overall cargo movement will remain firm.”
ONE moved into the black in its second year of operation, posting a profit of $105m for 2018-2019, after recording a deficit of $586m in the first year after the merger.
Comment on this article