News / ONE sees Q1 profits rise, but remains cautious as box shipping hits 'tipping point'

Photo: ONE

Ocean Network Express (ONE) reported a 12% year-on-year revenue increase in today’s Q1 results, along with a bullish outlook for full-year earnings, but the ocean shipping market has reached a “tipping point”, according to Xeneta.  

ONE revenue for Q1 was $4.2bn, resulting in a $779m net profit, up $266m on the same period last year, which, as the carrier’s financial year is offset, is April to June. 

Ebit was $667m and Ebitda was $1.217bn, compared with $385m and $770m, respectively, on Q1 last year. 

Global volumes grew 11.2% and ONE reported 100% vessel utilisation on both Asia to North America and Asia to Europe front-haul routes.  

The Japanese carrier explained: “Cargo movements have improved due to the increased consumer spending in North America and Europe. And although new vessel deliveries have led to oversupply in tonnage, prolonged rerouting through the Cape of Good Hope resulted in a reversal of oversupply.  

“As a result, spot freight rates increased, compared with Q4 FY23, across multiple tradelanes, including Asia-North America and Asia-Europe, due to tight supply and increased demand.” 

With substantial profit from hefty Red Sea-induced surcharges and volume increases, ONE adjusted its full-year earnings forecast to $2.745bn, up from $1bn announced three months ago.  

But ONE CEO Jeremy Nixon said: “The outlook, especially for the second quarter and beyond, is extremely uncertain. Also, it will take some time for the situation in the Middle East to normalise.  

“ONE will monitor evolving conditions and maintain agile and efficient operations, with a focus on delivering high-quality service to customers”. 

Meanwhile, Xeneta reported today that the ocean container shipping market had reached a “tipping point” this month. 

Long term rates on major front-haul trades were starting to increase, while short-term rates on major trades from the Far East had begun to soften, the crowd-sourced analytics platform found.

Xeneta senior shipping analyst Emily Stausbøll said: “Long-term ocean container shipping rates remained subdued, despite massive increases on the short-term market in May and June – but that is starting to change. 

“The narrowing spread between the markets presents a delicate balance ahead of long-term contract negotiations between shippers and carriers later this year. 

“This is a pivotal time for the market. The big question is, how high will long term rates climb before growth is stunted by the falling spot market? 

“Shippers will be hoping the spot market crashes back down hard and fast, while carriers will be doing everything possible to keep short-term rates elevated as long as possible,” she added. 

And she warned: “It will not take much to push ocean supply chains back into the red, and send spot rates heading upward once again, which would also have consequences for the long-term market.”