Around one-quarter of Ocean Network Express (ONE)’s tonnage will be from a single provider over the next year.
But ONE chief executive Jeremy Nixon said the Japanese line’s investment with the world’s largest boxship tonnage provider will not destabilise Seaspan Corp’s relationship with other charterers.
The Singapore-based carrier is set to double the number of container ships it has on charter from Seaspan to around 40 ships over the next 12 months, Nixon said in a business update on Friday.
The carrier currently charters around 20 of Seaspan’s container ships, mostly ranging from 4,500 teu to 12,000 teu.
“That’s about 12% of our fleet,” Nixon said. “Over the next 12 months, that will push up to around 35 to 40 vessels, which will push up to around 25% of our future tonnage provision coming through Seaspan.”
The vessels schedule for delivery from Seaspan include a series of 7,000 teu ships and some of 15,500 teu
Nixon said ONE had two types of relationships with Seaspan.
The first was as a minority shareholder with a 28.5% stake in Seaspan’s holding company Atlas Corp.
“That was purely a financial transaction,” Nixon said.
The second was an operational relationship involving Seaspan’s role as a tonnage provider.
“While we want to keep the operation of the companies separate, at the shareholding level, we have more strategic alignment,” Nixon said.
“We can look longer term to try to have more strategic involvement with Seaspan in a way that we manage our fleet with them.”
Longer term
Nixon pointed to “synergies and opportunities to improve the technical side of the business”, particularly towards newbuildings and decarbonisation.
“Seaspan is quite a significant supplier of tonnage to ONE,” Nixon said. “They are also a significant provider of tonnage to other carriers in the market, and we don’t want to destabilise that.”
Nixon said ONE had invested in Seaspan parent Atlas to meet its long-term charter needs.
“We previously had quite a lot of short-term tonnage, and we needed to move towards long-term thinking around leasing of ships and ownership of ships,” he said.
Nixon said the objective remains to shift the long-term portion to around 80% of the fleet.
“We will continue to have a balanced portfolio of long-term charters and owned tonnage,” he said. “And in terms of long-term charters, Seaspan will continue to be our most prominent provider of chartered tonnage.”
Service suspension
Nixon said cargo volumes out of mainland China to the US are quite limited so far this year.
That led ONE to announce on Friday the suspension of its PS5 service, which operates from China to the US west coast.
Nixon said the suspension of the service had been necessary because the cargo demand on that is only covering 70% utilisation.
The service suspension has been coordinated with its partners in THE Alliance including Hapag-Lloyd, HMM and Yang Ming Marine Transport Corp.
ONE is the Singapore-based container ship operation formed five years ago by Japan’s Mitsui OSK Lines, NYK Lines and K Line.
Nixon said ONE is the seventh-largest carrier and had a strong net profit margin in the 2022 calendar year.
The company has committed to taking delivery of 54 newbuildings.
Nixon said around 20 have been delivered and around 30 more are to come in the next two to three years.
The company has also expanded its international terminal operations including in the Magenta Singapore Terminal and US west coast.
Nixon said the goal is to grow the company sustainably over the next five years.
