Ocean Network Express (ONE) recorded a loss of $120m in its inaugural trading quarter. It says that, “This was due to providing clumsy services in the initial stage, and a rise in bunker prices on the expenditure side.”
However, for third partner MOL, the first quarter turned out quite nicely. It managed a three-fold increase in operating profit ($33.2m) despite a year-on-year revenue drop of 25%.
Cost of negligence
“The financial results of ONE deteriorated compared with the initial plan, because of a lower-than-expected handling volume,” it said.
Similarly, NYK saw revenue drop 10.5% year on year to $4.1bn, resulting in a $72.9m loss in operating income – container revenue alone plummeted by 53.3%.
Worst hit was K Line, with a 26.2% drop in its second-quarter revenue and an operating loss of ¥13.7bn ($123.4m).
Chaotic onboard tech
The carrier also blamed its poor results on the start of ONE operations, in particular problems with operating systems. “Administrative problems occurred due to insufficient employee familiarisation with the systems,” the company said.
During ONE’s launch phase, shippers told The Loadstar they had experienced issues with not only locating their cargo but also in getting through to the network.
One source today described ONE’s birth as “chaotic”, due to trying to fit three lines into one sector.
Investors bare losses
“For investors, it has been anything other than the anticipated savings they’d expected, instead having to bear heavy losses,” the source added.
“And with bunker costs up in the second quarter, they could be facing further losses, made worse by the fact they are now in catch-up mode both in terms of reputation and volumes.”
It noted that ONE’s business performance was less than expected, with volumes below those projected, largely due to disorder in the services.
“Nevertheless, ordinary loss for the segment improved, compared with the corresponding period of the previous fiscal year,” it said. “This was due, partly to the effect of recording provisions in the fourth quarter of the previous fiscal year for business restructuring loss related to vessel chartering and so on.”
Following ONE’s first set of results, its first-half forecast has been revised from a profit of $107m to a loss of $38m.
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Source: The Loadstar
