Ocean Network Express (ONE) has lowered its full-year outlook for 2025, stating that the container freight market may not be as strong as initially anticipated. The Japan-based carrier has reduced its annual net income forecast from $700 million to $310 million. This is the second time this year that the company has revised its projections downward, following an earlier cut from $1.1 billion in August.
The revised estimate anticipates a net loss of $61 million in the second half of ONE’s fiscal year, influenced by uncertainties from U.S. tariffs on trade partners. The previous forecast had projected a $150 million profit for the same period.
Red Sea Diversions Impact Vessel Rotations
The ongoing situation in the Red Sea remains a critical factor, with projections depending on whether vessels can safely return to the Suez Canal. ONE reports that security risks persist, and ships are expected to continue their longer routes around the Cape of Good Hope. These diversions have absorbed excess vessel capacity, preventing a more severe oversupply situation and contributing to congestion at major Asian and European ports.
According to data from Linerlytica, if all container ships currently using the Cape route were to return to the Suez Canal, it would release over 130 ships, or 1.95 million TEUs (20-foot equivalent units), back into global capacity. This represents 5.9% of the global fleet and could cause significant disruption to freight and charter markets. The majority of these vessels would re-enter the Asia-to-Europe trade lane.
New Vessel Deliveries to Influence Market
In addition to the Red Sea situation, ONE anticipates that the continuous delivery of new vessels throughout the fiscal year will further impact market conditions. The company itself has 51 new vessels on order.
“We maintain a cautious outlook for the full year given current market dynamics,” said Jeremy Nixon, CEO of Ocean Network Express. “We will continue to take steps to adapt our network and optimize our fleet, ensuring we meet market demands and provide customers with long-term reliability.”
For its second quarter, ONE reported a 24% decrease in revenue to $4.5 billion, with a net profit of $285 million. The company transported 3.3 million containers, a slight 1% increase in volume from the previous year. However, revenue per TEU fell by 25%, indicating lower earnings for its services.
Overcapacity Leads to Lower Vessel Utilization
Similar to its competitors, ONE experienced a surge in cargo demand in July as businesses front-loaded shipments ahead of U.S. tariff deadlines in August. This affected the Asia-North America trades in particular. The resulting increase in capacity led to a drop in vessel utilization. On the trans-Pacific eastbound route, utilization fell from 100% to 91% year-on-year, while the Asia-Europe westbound route saw a decline from 97% to 91%.
Backhaul utilization, which involves the return trip to the origin port, saw an even steeper decline. Trans-Pacific westbound utilization dropped from 39% to 24%, and Europe-to-Asia eastbound levels fell from 45% to 36%.
Trade War Disruptions Worsen Imbalances
Lars Jensen, CEO of Vespucci Maritime, noted the impact of the U.S. trade war. “On the Pacific, ONE saw eastbound volume decline 2.6 percent whereas backhaul westbound volumes plummeted 26.7 percent,” he stated. This has worsened the trade imbalance; previously, for every 2.6 full containers shipped from Asia to North America, one container returned with cargo. Now, that ratio has shifted to one return container for every 3.5 full containers sent.
In response to these market changes, ONE is reviewing its cargo portfolio and vessel deployment to improve yield management. A recent example is the cancellation of its West Coast Pacific South Loop 5 (PS5) service.
Potential for Short-Lived Freight Rate Rebound
Despite a two-month decline in spot rates, ONE’s average freight rate in the July-to-September quarter was slightly higher than the previous quarter. This contributed to a significant sequential profit increase from $86 million to $285 million.
Recent weeks have seen a rebound in freight rate indices like the Drewry World Container Index (WCI) and the Shanghai Containerized Freight Index (SCFI), as carriers have increased blank sailings and implemented new rate increases. While the WCI has risen for three consecutive weeks, Drewry anticipates this momentum will be temporary and expects rates to decline again soon.