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One Manato

Hapag-Lloyd and ONE join Maersk/IBM blockchain platform TradeLens

Hapag-Lloyd and merged Japanese container carrier Ocean Network Express (ONE) are the latest box shipping lines to join the IBM/Maersk Line-led blockchain initiative TradeLens.

The news means more than half the world’s container shipping capacity is part of the TradeLens project, following the addition of MSC and CMA CGM at the beginning of June. Of the top six largest box carriers, just Cosco/OOCL is not part of the project.

“The addition of more leading carriers to TradeLens will help global supply chain customers expand and explore the benefits of digitisation and deliver new opportunities to the increasing number of TradeLens ecosystem participants across the global supply chain,” said Vincent Clerc, chief commercial officer at Maersk.

“As a neutral industry platform, TradeLens offers supply chain visibility, ease of documentation and the potential of introducing new products on top of the platform. These attributes bring new opportunities for the Maersk transformation towards becoming an end-to-end container logistics company improving the experience and services we offer the customers,” he added.

Hapag-Lloyd and ONE will each operate a blockchain node, participate in consensus to validate transactions, host data and assume the role of ‘trust anchors’ – or validators – for the network.

Both companies will be represented on TradeLens’ advisory board, which includes members from across the supply chain to advise on standards for neutrality and openness.

“TradeLens has made significant progress in launching a much-needed transformation in the industry, including its partnership model,” said Martin Gnass, managing director of information technology at Hapag-Lloyd.

“Now, with five of the world’s six largest carriers committed to the platform, as well as many other ecosystem participants, we can collectively accelerate that transformation to provide greater trust, transparency and collaboration across supply chains and help promote global trade.”

A senior TradeLens executive added that blockchain technology was ideally suited for large networks of disparate partners, given that established a “shared, immutable record of all the transactions that take place within a network and enabled permissioned parties access to secured data in real time”.

Bridget van Kralingen, senior vice president of global industries, clients, platforms & blockchain at IBM, explained: “Through improved trust, simplicity and improved insight into provenance, blockchain solutions such as TradeLens are delivering proven value across business processes for our clients and their ecosystems.

“Massive new efficiencies in global trade are now possible, and we’re seeing similar effects across the food industry, mining, trade finance, banking and other industries where the value of blockchain is more apparent than ever before,” she added.

Source: The Loadstar

One Manato

$586m loss hits ONE’s parent carriers

Japanese merged carrier Ocean Network Express (ONE) recorded a net loss of $586m in its first year of operation, however it said it expected to move into the black in its second year. 

ONE, formed from the container businesses of K Line, MOL and NYK,was supposed to produce synergistic returns for its parents. Instead it has dragged down the P&L accounts of the trio, which announced annual results today.NYK, which holds a 38% equity stake in ONE, posted a massive group loss of ¥44.5bn ($400m) for the year, prompting the replacement of Tadaaki Naito as president. The company said  it resolved a change of its chairman, president and representative directors. The new president will be Hitoshi Nagasawa, currently executive vice president corporate officer.
And, like its compatriots, NYK also underestimated the cost of ending its legacy liner business. It said it suffered “higher than expected one-time costs required to terminate the container shipping business”, which included severance payments to agents and penalties incurred on returning surplus containerships to owners earlier than the charter party expiry dates.

K Line recorded a loss of ¥11bn ($99m) for the year, citing red ink incurred from its 31% stake in ONE as the primary reason.

Only MOL, which also has a 31% holding in ONE, managed to stay in the black for the year, achieving a positive result of ¥27bn ($240m), mainly attributable to good performances from its dry bulk and energy transport businesses.

But the carrier noted the business performance from ONE had resulted “in a significant deficit” from the sector.

The botched launch of ONE on 1 April last yearresulted in a significant loss of business and an estimated $400m impact on the bottom line.

Chief executive Jeremy Nixon explained to investors in November that management had “underestimated the initial launch resource requirement”, causing chaos on operations desks throughout the new organisation and obliging loyal Japanese trading house customers to book their containers with other carriers.

On the key Asia-Europe and transpacific tradelanes, it took ONE several months to regain customer confidence and thus restore load factors to acceptable levels.

For the full-year utilisation levels recovered to 87% and 88%, respectively for the Asia-US and Asia-Europe headhaul routes, having plunged below 70% in the first quarter.

Turnover in the first 12 months was $10.9bn, but ONE is seeking to improve its revenue in year two by 17% to $12.7bn and is targeting a profit of $85m.

ONE is more optimistic about growth than some of its peers and is projecting a 4% increase in demand.

“Profit is expected to gradually recover throughout H1, with improved lifting,” said ONE, adding it expected that liftings would be restored to the pre-integration levels of the three carriers during the period.

It said however that in the first three months of the calendar year, and the carrier’s Q4, trade had been “relatively weak” eastbound between Asia and the US “due in part to a backlash downturn from the earlier rush demand ahead of additional US tariffs on China”.

In regard to the Asia to Europe tradelane it said that although long-term contracts had improved, soft demand following the Chinese new year had resulted in a decline in spot rates.

ONE said that its action plan for profit improvement was to “establish an organisation that can tolerate market volatility” advancing the carrier from a period of “stabilisation” to a secondary stage of “reformation”.

The four parts of its 2019 action plan are: cargo portfolio optimisation; product rationalisation; an organisation restructure and an increase in the targeted $1bn cost saving synergies from the merger to 96% this year, from the 82% achieved in the first year.

Source: The Loadstar