Japan’s Ocean Network Express (ONE) saw quarterly profits plunge by nearly $5bn on the back of tumbling spot markets.
Net profit sank to $513m in the period from April to June, down 91% from $4.98bn in the same period last year.
Revenues more than halved to $3.7bn, down from $9bn in the previous corresponding period.
The Singapore-based company said that global cargo demand was significantly lower.
East-west routes had suffered a fall in demand due to stagnant retail consumption in Europe and the US as a result of high interest rates and inflation, it said.
On the supply side, capacity increased as port congestion had dissipated and there was no significant improvement in the softening supply-demand balance.
That meant freight rates remained significantly lower, decreasing profit, the company said.
Chief executive Jeremy Nixon pointed to measures taken to deal with the new market environment and hinted at downsizing liner networks.
The Japanese carrier operates with its partners in THE Alliance comprising Hapag-Lloyd, HMM and Yang Ming Marine Transport.
“Overall, consumer spending is holding up, but with ongoing headwinds from future interest rates and inflation being higher and lasting longer than analysts had expected,” he said.
“Therefore, it is now more likely that signs of a strong recovery in orders and inventory rebalancing will not be so apparent until later this year.”
“This will require some early network downsizing adjustments to better manage utilisation levels and schedule performance over the next six months,” he said.
Nixon pointed to the sense of uncertainty for the world’s sixth-largest liner operator.
The container ship market was in the midst of “major changes” that made it impossible to predict how its results would be impacted.
Major changes
These included the aftermath of global supply chain disruption, changes in consumer behaviour and shifts in trade patterns due to increasing international tensions.
“ONE is making progress in adapting to these major changes, but further shifts in the market are expected, as transport demand and trade patterns continue to alter, creating an uncertain outlook which is difficult to predict,” the company said.
“Under these circumstances, it is extremely difficult to announce a reasonable business forecast at this time and the full-year forecast for 2023 is yet to be determined.
“ONE is committed to stabilising its performance while responding flexibly [and] maintaining the flexibility to respond to changes in the business environment,” it added.
ONE was formed five years ago by Japan’s Mitsui OSK Lines, NYK Lines and K Line.
