JAPAN’S Ocean Network Express has joined the vast majority of leading container lines in reporting a massive drop in revenue and earnings for its 2023 financial year but managed to eke out a profit of US$974 million.

For FY23, which ran from April 2023 to March 2024, ONE saw a 50% drop in revenue to US$14,536 million, while EBITDA fell 87%, EBIT by 97% and profit by 94% compared to the previous year.

However, ONE grew liftings over the year by 8% to 12.019 million TEU, highlighting how the collapse in freight rates drove revenues and profits down.

The line said there were increases in ship costs due to recovery of the charter market, which had been sluggish since COVID-19, and increase in fuel and port costs due to more voyages and port calls as result of resolved congestion. Bunker costs fell slightly while overheads were at the same level as 2022.

The short-term freight rate market continued to decline due to sluggish cargo movements and pressures from the supply side as new vessel deliveries continued. However, in ONE’s 4Q [1Q calendar 2024] freight rates rose due to geopolitical uncertainty surrounding the situation in the Middle East.

While consumer spending remained strong in North America, lingering inflation was a drag in Europe, and cargo movements generally did not recover in earnest.

High tonnage supply continued due to the influx of new vessels. However, rerouting via the Cape of Good Hope as uncertainty surrounding the situation in the Middle East continued, resulted in a reversal of the oversupply situation.

As a result, market conditions continued to decline until the end of calendar year 2023, but short-term freight rates rose significantly in FY2023 4Q, ONE said, in news that portends well for other carriers’ 1Q results.

For the full year forecast for FY2024, profit is expected to be around US$1,000 million, a slight increase from the previous year, as the current economic and geopolitical environment are expected to continue for the time being.

Jeremy Nixon, CEO of Ocean Network Express said: “We will continue to monitor the situation carefully, focusing on maximizing profit by flexible tonnage deployment and efficient equipment control based on demand.”