Ocean Network Express said it saw a “significant deterioration” in profit — a 50% drop quarter over quarter.
ONE reported that its fiscal year 2022 third-quarter profit was $2.76 billion, a $2.75 billion plunge from the $5.52 billion reported in the second quarter and a $2.12 billion drop from $4.88 billion in the year-ago period.
In an eight-page PDF posted Tuesday, ONE, established in 2017 through the integration of three Japanese shipping companies, said the profit dive resulted from “a rapid reduction in the short-term freight market.”
It cited a cargo demand decrease in east-west trades because of elevated inventory levels in North America and rising inflation in Europe. In particular, cargo volume from Asia to North America was down 19% year over year in October and November, ONE said.
“The short-term freight rate market deteriorated sharply from 2Q due to a further softening of the supply-demand balance resulting in a sharp fall in profitability compared with both 3Q FY2021 and 2Q FY2022,” the report said.
ONE said Q3 revenue totaled $6.25 billion, down 33% from $9.36 billion in Q2 and down 25% from $8.33 billion in the third quarter of the 2021 fiscal year.
Earnings before interest, taxes, depreciation and amortization totaled $3.06 billion, down 48% from $5.84 billion in the second quarter and down 42% from $5.28 billion in the year-ago period.
ONE further blamed the Q3 results on landside logistics disruptions, including COVID lockdowns in China and congestion at European container yards and on North American railways.
The number of blank sailings is expected to increase in the fourth quarter “due to the longer slack season around Chinese New Year and the time it takes for the cargo volume to recover after the holidays,” ONE said, adding that “profitability is expected to deteriorate in 4Q due to the softening of supply and demand.”
ONE said its investments to expand service include 10 vessels each with a capacity to carry 15,000 twenty-foot equivalent units. The first, the ONE Freedom, was delivered in October. The remaining nine are expected to be delivered in 2023.
“At ONE, we continue to press ahead in our network developments and sustainability measures, enhancing our digital services and improving our operation excellence with our acquisition” of three container terminals in Los Angeles and Oakland, California.
Click here for more American Shipper/FreightWaves stories by Senior Editor Kim Link-Wills.
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