22 March 2024 (Lloyd's List) - OCEAN Network Express has outlined an ambitious fleet expansion plan to boost its total capacity to 3m teu over the next six years, as part of its newly announced growth strategy.
Investment of up to around $35bn is being prepared to fund the company’s transition into “sustainable growth”, which also includes hitting decarbonisation goals and expanding the container shipping value chain.
The plan, detailed in its 'ONE 2030' corporate presentation, could potentially see the Singapore-based line overtake at least Hapag-Lloyd to become the fifth largest container shipping carrier in the world.
Among top global carriers, only four currently have capacity exceeding the 3m teu mark: Mediterranean Shipping Co, Maersk, CMA CGM and Cosco Shipping.
ONE currently operates slightly over 1.8m teu, with an extra 30% on order. That compares to Hapag-Lloyd's 2m teu fleet plus a 10% orderbook, according to Alphaliner data.
Ranked fourth, Cosco Shipping has 3.1m teu in service, with newbuildings under construction accounting for about a quarter of its existing fleet.
The 3m teu fleet size envisaged this time is also larger than ONE's target announced two years ago of reaching around 2.3m teu in 2030. This means the company would need to add at least around 700,000 teu of capacity over the next 5-6 years, without considering old ships retiring.
The new vision comes as Hapag-Lloyd, its partner in The Alliance, announced earlier this year it will form a new grouping called Gemini Cooperation with Maersk, starting services in February 2025.
This triggered concerns over whether ONE and its remaining partners can maintain the scale and efficiency of their collaboration.
In response, ONE chief executive Jeremy Nixon said earlier this month at an industry conference in the US that his company would be better in 2025 than this year.
“ONE is shifting gears towards ‘Sustainable Growth’, working to become one of the world's leading container shipping companies,” the company said in the presentation.
Securing economy of scale is one of three pillars to achieve this goal.
The other two are advantage in operational efficiency and success in decarbonisation, financial stability and sustainable organisation.
To deliver the grand growth strategy, ONE plans to invest over $25bn in its container shipping business over the period to 2030. Additionally, up to $10bn will be considered for expanding its container shipping value chain.
ONE said its stake in Atlas Corp, the owner of tonnage provider Seaspan, and investments in strategically important US West Coast ports are good examples of how it has extended the value chain beyond just the ocean shipping operations.
Moreover, green and digital transformation are cited as among the crucial means to pursue “sustainable growth”.
ONE said it will continue pursuing its target of net zero greenhouse gas emissions, encompassing scope 2 and 3 emissions, by 2050. Measures include increasing the ratio of zero carbon emission vessels to over 20% across its fleet by 2035.
The company pointed out it has achieved impressive financial results with a combined net profit of $34.5bn in its first five years since formation – although much of this came from the market boom during the pandemic.
Looking ahead, it expects the next two years' earnings outlook to be relatively uncertain due to massive newbuilding deliveries and geopolitical impacts. But after that, earnings are predicted to recover backed by improved market fundamentals and the company's investments.
ONE forecasts its profit will reach $3.8bn for the fiscal year ending March 2031, compared to $856m it projected for the period from April 2023-March 2024.
