Japan’s ‘Big Three’ shipping companies – Mitsui OSK Lines (MOL), Nippon Yusen Kabushiki Kaisha (NYK Line), and Kawasaki Kisen Kaisha (K Line) – posted mixed results for their full-year earnings.
Japan’s financial year (FY) starts on 1 April and for FY2014, MOL’s profit fell 26% year on year (y/y) to JPY42.356 billion (USD352.47 million).
NYK Line’s profit rose 44% y/y to JPY47.59 billion, as profits at all its shipping divisions were up y/y. K Line’s profit was up 61% y/y to JPY26.82 billion.
While Japan’s biggest shipping company had lower profits, NYK and K Line increased their earnings.
MOL’s lower earnings were mainly due to the widening loss at its container shipping division, which has been struggling to turn in a profit for the last three years.
MOL’s container shipping division had a JPY24.1 billion loss for FY2014, compared to a JPY14.5 billion loss for FY2013.
Stable earnings in MOL’s dry bulk shipping, tanker, LNG, LPG, and car-carrier businesses, which are built on long-term affreightment contracts, kept the company in the black.
MOL said its container shipping division was battered by the labour dispute in the US West Coast ports and the increasing capacity from the deployment of ultra-large container ships into long-haul routes and the cascading of post-Panamax ships into regional routes.
“Cargo volumes from Europe and the United States to China and other Asian countries showed weak growth and the Asia-bound freight market remained stagnant. On the west coast of North America, cargo handling efficiency was lowered by a labour slowdown which was organised by a labour union in connection with protracted labour renegotiation,” said MOL.
“On the North-South routes, the freight market continued to struggle due to widening of the gap between supply and demand resulting from allocations of large vessels particularly to the South America east coast route.”
Earnings at NYK Line’s container and logistics divisions were up 12.8% y/y to JPY696.3 billion and JPY486.9 billion. Its bulk shipping unit’s profit was stable at JPY995.8 billion.
To reduce costs and boost earnings for its container shipping business, NYK Line expanded co-operation under the G6 alliance to trans-Pacific west coast and Atlantic routes, enabling further consolidation and enhancement of the service network.
The company also reorganised routes in Asia, West Africa, and the Americas to improve service competitiveness. NYK Line also returned chartered-in ships that had high fuel consumption and deployed fuel-efficient ships to lower fuel costs.
While MOL’s container business continues to struggle with profitability, K Line managed to restore its container division to profitability. K Line’s container unit earned JPY20.6 billion for FY 2014, reversing a JPY100 million loss for FY 2013.
K Line said its container cargoes rose 4% y/y and falling bunker prices enabled the container division to turn in a profit. Its other businesses, except heavy-lift shipping, turned in a profit.
All three companies said they expect FY 2015 to be challenging, especially for dry bulk and containers. Due to this, they will strive to lower costs through slow-steaming, deploying fuel-efficient ultra-large container ships, and reorganising routes.
This post was sourced from IHS Maritime 360: View the original article here.
