Ocean Network Express (ONE) has reported a significant drop in its Q3 FY22 profits compared to the same period the year prior and to the previous quarter.
The company saw a net profit of $2.77 billion, down 50 per cent from the record $5.52 billion reported in Q2 FY22 and a 43 per cent drop compared to the same quarter in FY21.
ONE cited the deterioration of short-term freight rate market in Q2 2022 as the main factor of its financial loss, as the softening of the supply-demand balance resulted in a sharp fall in profitability.
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In addition, a reduced cargo demand from Europe and the US – with the increase in inventories in North America throughout the summer and rising inflation in Europe – led to a significant decrease in liftings.
Volumes declined from 2.9 million TEU in Q32021 to 2.6 million in Q32022, registering a drop of 10 per cent year-on-year.
The full year FY22 forecast stands at $14.7 billion (profit after-tax), however, ONE forecasts a further substantial fall in profitability for Q4FY22 with a profit of $940 million (after tax) for the three-month period ending 31 March 2023 due to the softening of supply and demand.
Compared to its previous forecast, ONE anticipates that less cargo movement and increased blank sailings will lead to decreased liftings for FY22.
The news comes as Hapag-Lloyd was able to retain its volumes and reported a successful financial year.
At the beginning of this year, ONE signed definitive agreements to acquire a 51 per cent stake in each of TraPac LLC (TraPac) and Yusen Terminals LLC (YTI).
The acquisitions are part of the integration of the container shipping businesses from the parent companies into ONE.