Outlook for container shipping ‘extremely uncertain’

For Q1 FY2024 ended 30 June ONE reported a net profit of $779 million up 72% on the same period in the previous year. Revenues for Q1 FY2024 were $4.21 billion up 12%.

Reviewing the market situation the company noted that cargo movements had become stronger against a background of container ship capacity becoming increasingly tight. “Cargo movements are in a recovery trend, with personal consumption spending remaining strong in North America and consumer demand recovering due to easing inflation in Europe,” ONE said.

While there has been high tonnage supply due to an influx of newbuildings the continuing uncertainty in the Middle East and diversions by the Cape of Good Hope have resulted in a reversal o oversupply. This is reflected in an increase of spot freight across multiple trades including Asia – Europe and Asia – North America in Q1 FY2024 compared to the previous quarter.

In common with other major lines, ONE has diverted its Asia – Europe/Med services via the Cape of Good Hope to avoid Houthi attacks on commercial shipping in the Red Sea. Only CMA CGM among the largest lines is operating a single Asia – Europe service via the Red Sea and the Suez Canal.

Looking ahead ONE has increased its net profit guidance for FY2024 to $2.75 billion compared to $1 billion previously. However, ONE stressed the difficulty in forecasting due to an “extremely uncertain” outlook for Q2 FY2024 and beyond.

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Much of the increased profit guidance falls in Q2 with an expectation of a $1.47 billion profit for the period. ONE forecast a much lower level of a $500 million in H2 FY2024.

The company noted the demand – supply balance remains uncertain beyond Q2, although a normalisation of the situation in the Middle East was “expected to take some time”.