Stable cargo flows and firm rates push ONE to higher third-quarter profit
Transpacific volume was driven by strong consumer spending as well as concern about supply chain disruption due to the labour negotiation in the US east coast and Gulf ports. Asia-Europe trade was also robust
Singapore-based container line posted a FY24 third-quarter profit of $1.2bn, switching from an $83m loss in the corresponding period a year earlier, despite a continued increase in vessel supply
FIRM spot rates and stable cargo movement helped Ocean Network Express to turn in a significantly improved FY2024 third-quarter profit of $1.16bn, turning around from an $83m loss in the previous corresponding period despite the continued increase in vessel supply.
The Japanese container line said in a press release the Asia-North America trade saw stable cargo movement, while the Asia-Europe trade also saw strong flows.
The former in particular was driven by strong consumer spending as well as concern about supply chain disruption due to the labour negotiation in the US east coast and Gulf ports.
After peaking and sliding since September, cargo movements from Asia to North America in October and November increased by 15% year on year. This was due to strong consumer spending and front-loading in anticipation of possible port disruptions.
In addition, with continued rerouting of vessels round the Cape of Good Hope because of the unstable geopolitical situation, there was no significant change in the overall supply-demand situation, ONE said.
In terms of the various trades, transpacific headhaul saw cargo movement slow down initially, but this recovered in the latter half of the quarter, boosted by concern about the potential strike at the US east coast and Gulf ports. Utilisation jumped to 100% and liftings rose 9% to 713,000 teu from the previous corresponding period.
ONE was able to gain from the volume spikes by deploying extra loaders in several trades to respond to strong cargo demand.
In the Asia-Europe westbound trade, the advanced cargo rush for the holiday season in the second quarter led to a slowdown in cargo movement at the beginning of the third quarter, ONE added. However, cargo demand recovered gradually in November and December.
Despite this, cargo movements from Asia to Europe 18% year on year in October, driven by easing inflation, sustained growth in consumer spending, and front-loading ahead of the Lunar New Year.
In terms of rates, spot freight rates decreased sequentially from the second quarter in both the North America eastbound trade and the Asia-Europe westbound trade, however they were still much higher than the corresponding quarter of last year.
Supported by the solid results in the first three quarters of the year, ONE raised its full-year profit forecast by $939m to $4bn.
Looking ahead, with the traditional slack season approaching, ONE said it expected to see a slow down in cargo movement, coupled with increasing uncertainty in the business environment.
The softening supply-demand balance is however expected to recover gradually after the Lunar New Year.