News / Soaring spot rates and demand steer ONE to a profitable second quarter

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Japanese ocean carrier ONE has reported a profit of $515m for its second quarter, between July and September, and said it was on track to be $1bn in the black for the full year.

It was, however, still cautious about mid- to long-term prospects due to the “very uncertain” impact of the pandemic on cargo demand.

The merged container business of K Line, MOL and NYK is the first major carrier to report financial results for Q3 in what is expected to have been a bumper period for an industry boosted by surprisingly strong demand and soaring freight rates.

ONE’s revenue for H1 was slightly down on the same period of the previous year, at $5.92bn, however the carrier’s profit for the six months improved substantially to $682m, compared with $126m the year before, attributed mainly to “improvements in the short-term freight market”.

“From Q1 and through Q2 the supply and demand balance improved for all trades, most notably Asia-North America where liftings recovered to the level of the previous year,” said ONE.

And ONE also saw the benefit of a 23% fall in the average cost of bunker fuel for its ships to $328 per ton, when the carrier levied a low-sulphur fuel surcharge.

It also credited the deployment of THE Alliance member HMM’s newbuild 24,000 teu ULCVs on the Asia-North Europe tradelane, which it said had enabled a “more competitive product”.

The carrier did not report total liftings for its services, but on its biggest trade, the transpacific, which has seen spot rates skyrocket by 190% between Asia and the US west coast and 100% for US east coast ports, it carried 1,375,000 teu on the headhaul leg during the H1 period – up 125,000 teu on the year before – and achieved a 98% utilisation level for its vessels.

ONE also reported a load factor of 97% on Asia-Europe headhaul, although liftings of 766,000 teu were 116,000 teu down on the same period of the previous year.

SeaIntelligence’s Lars Jensen attributed the line’s stellar performance to tight capacity management. he said: “The low volume development is clearly the result of the aggressive blanking programme which helped cut costs and improve profitability at the height of the pandemic impact.”

This  was in contrast to rival carrier Cosco subsidiary OOCL, which reported 11.1% year-on-year growth in transpacific volumes in Q2, compared with just 0.9% by ONE.

MOL said: “With fuel prices also remaining at the low level seen in the first quarter, ONE reported a substantial profit.”

Hapag-Lloyd is due to publish its Q3 results on 13 November, and Maersk on 18 November. Both carriers recently upgraded their full-year profit guidance significantly.