New Japanese container line joint Ocean Network Express (ONE) is forecast to lose $600 million in its first year of operation with lower than expected volumes caused by issues with its IT systems and higher than expected fuel costs.
In a joint statement by the three shareholders of ONE – NYK, Mitsui OSK Lines (MOL) and K Line – said that the full year result of ONE was forecast to be a $600 million loss for year the ended 31 March 2019 compared to a previous of a $100 million profit after tax. ONE, which is headquartered in Singapore, started operations on 1 April this year.
The companies said that while synergy savings from ONE had emerged steadily liftings and utilisation after the line started operation had been hit by teething problems with its IT systems.
“Liftings and utilization dropped due to the impact of teething problems immediately after the commencement of services in April of this year. 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 route,” the three companies said.
In addition on the cost side ONE has been hit by higher bunker prices, which have impacted the results of companies across the container shipping sector.
The teething problems, which they said were now solved, related to the new company’s IT systems. “Booking reception and documentation operations were 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. Issues such as the staff’s skill level and personnel shortages have already been addressed, and their operations have returned to normal,” the statement said.