Chaotic Launch Causes ONE to Loss

Luthfil Hadi - Jakarta, 19/10/2018, 14:08

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Japan carrier network, Ocean Network Express (ONE) experiencing a huge loss. ONE predict that their loss could rise up to 600 million USD on their first year. The prediction came up because ONE have lost their customer’s trust. Their customer lost their trust in ONE after the chaotic launch in April.


ONE is a joint venture company between 3 major shipping companies in Japan. They are K Line, MOL, and NYK. With K Line and MOL own 31% of shares, and NYK 38%.


Jeremy Nixon, ONE’s CEO along with his team said that ONE has a great prospect. They claimed that ONE has huge profit potential from synergy cost savings up to 1 billion USD per year. He also said that ONE has the potential to obtain profit for their first 3 year. Starting with 110 million USD in the first year, their prediction said ONE will obtain 313 million and 648 million in the next 2 years.


However, what really happen is the exact opposite of their prediction. K Line said that the April launch was “clumsy”. That launch caused ONE to lose their customer’s trust. Even though their customers were the loyal customers of their 3 investor. Customers that have been with them for decades.


On April when ONE launches, there were problems with their IT systems. The problem caused the customers unable to obtain any information about the status of their cargo. Moreover, the customers were also unable to book container.


Until September 30th, ONE’s reported loss reached 310 million USD. That was the loss for their first 6 month. It was predicted that they would continue to experience loss. Their first year loss is predicted to be 600 million USD.


ONE’s board of directors blamed the “teething problem” and the lack of staff. Those problems caused the lifting and utilization level to drop. Furthermore, their staff were not familiar with NYK’s IT systems. Hence, the launch in April ended up in chaos.


The hike in the fuel price caused ONE to fail in saving their expenses. The trade wars between USA and China also affected ONE’s performance. They even had to revise their business forecast for 2019 and 2020 after assessing the condition.


Now K Line, MOL, and NYK have to properly explain to their investor as to why ONE’s start is a chaotic one. They have to prepare a satisfactory explanation to their investor.


On the other hand, ONE’s management has finally agreed to revise their rationalization plan. They used to plan to save many cost on many sector. Now, they agreed to increase their staff number, they even agreed to hire new workers. Everything is done in order to regain their customer’s trust.


However, several shipper and forwarder could only show their support to ONE by ordering the minimal amount of container. It was due to the contract their customer had with other carrier companies when they caused chaos back in April.


Reference:


https://gcaptain.com/


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