On a dire day for Japan’s big three shipping lines, Nippon Yusen Kaisha (NYK) revealed a record loss of just shy of $2bn for the first nine months, Mitsui OSK Lines (MOL) was forced once again to revise downwards its full-year forecast and Kawasaki Kisen Kaisha (K Line) notched up a poor $468m loss for the first three quarters.
NYK grabbed the headlines with a Y226bn ($1.99bn) loss for the nine-month period compared to a JPY22.82bn profit in the same period a year earlier. NYK was hit with Y200bn worth of impairments on cancelled charter contracts.
Over at MOL, accountants have had to revisit the books not for the first time during the current financial year which finishes at the end of March.
While MOL stood out compared to its two main rivals, reporting a nine-month profit of Y19.03bn ($163.33m), it slashed its full year forecast from Y7bn to zero. It had made an earlier revision at the end of October.
“The company conservatively reviewed the consolidated business outlook and made a downward revision of net income due to concerns about possibility for more impairment of owned containerships depending on future trend in ship prices, which showed a significant drop over the past year, and the future cash flow, which will be planned,” MOL said.
K Line, meanwhile, saw its losses balloon in the same period. The company reported a Y54.58bn ($468.5m) loss for the first nine months compared to a Y9.27bn loss in the same period of 2015.
“[A]lthough signs of recovery in the overall marine transportation market conditions are finally beginning to appear, it is going to take some time before the balance between vessel supply and demand improves fundamentally. In these conditions, the Group will strive to improve profitability through efficient vessel allocation and further cost cutting while implementing structural reforms as planned,” K Line said.
On the market outlook, NYK noted in a statement: “We foresee the recovery in the container shipping department to continue in the fourth quarter. The slump in automobile shipping demand to resource-rich countries is expected to continue for some time. Dry bulk department is recovering from historic lows. In the liquid department, oil-products and LPG shipping market may take some time to recover, but LNG and offshore businesses with long-term contracts are expected to continue to produce stable profits.”
The three Japanese shipping majors, who together control more than 2,000 ships, announced last year that they will merge their container shipping divisions to create one of the world’s largest liner companies.