Newly-launched Ocean Network Express (ONE) expects to report much wider loss than previously estimated, the company said in a downgraded business forecast for the first half and full year.
Specifically, for the first half of the fiscal year 2018, covering the period from April to September 2018, ONE expects its loss to reach USD 310 million, much wider than USD 38 million previously forecast.
The liner company said that it has already factored in the impact of the U.S.-China trade friction in its second half outlook to a certain degree.
For the full fiscal year, covering the period from April 2018 to March 2019, the company anticipates to book a loss of USD 600 million, a major downgrade from the expected profit of USD 110 million.
The main reason affecting the business performance of the company is the drop in liftings and utilization, driven by the impact of teething problems that emerged immediately after the commencement of services in April this year.
ONE explained that the teething problems relate to booking reception and documentation operations which had been delayed because “ONE staff were not completely familiarized with the newly introduced IT system, and the staff were shorthanded. This caused significant inconvenience for customers. “
“ONE sought to regain lost ground during the peak season from July to September, but liftings and utilization remained lower than the outlook because the negative impact remained on its main Asia-North America routes and Intra-Asia routes,” ONE further noted.
The consolidated container business of the Japanese trio, NYK, MOL, and K-Line, pointed out that the teething problems regarding ONE’s services have already been resolved.
“Issues such as the staff’s skill level and personnel shortages have already been addressed, and their operations have returned to normal,” ONE added.
“ONE Holdings and ONE are working earnestly to restore the trust of customers and further improve service quality. However, liftings and utilization are still on the way to recovery, and the target for additional cost reduction to address increased bunker prices, is expected to be lower than the target in the previously announced forecast. Therefore, ONE made a downward revision in the previously announced full-year business forecast as well.”