AsiaContainersDry Cargo

Japan’s big three lines slash full year forecasts

The full scale of the dire shipping markets has been shown in today’s results from Japan’s big three shipping lines – Mitsui OSK Lines (MOL), Kawasaki Kisen Kaisha (K Line) and Nippon Yusen Kaisha (NYK) – with significant changes to full year forecasts being announced.

MOL said it would carry out structural reform of its dry bulk and container divisions as it warned of severe losses – to the tune of $1.45bn – for the current financial year which ends in April. The revised figure comes despite MOL managing a $110m profit in the first nine months.

On dry bulk, MOL commented: “In the dry bulker business, the market is deteriorating to a new record low due to the imbalance of fleet supply and demand, along with stagnant cargo trade resulting from the slowdown in China’s economy since last fall.”

MOL will cut the number of capesizes trading on the spot market and withdraw excess tonnage in the panamax and handy sectors.

On its container business, MOL said: “[C]argo volume, mainly for Europe and emerging countries, hovered at low levels while a succession of newbuilding vessels came into service, keeping freight rates at historic lows.”

It intends to cut its exposure on north-south trades and slash its fleet, especially mid-sized ships.

K Line has also been forced to revise its full year forecast to $58m from an earlier estimate of $99.5m. Like MOL, K Line cited the poor dry bulk and container markets for the changed forecast.

“A large number of newbuildings’ delivery, while cargo movements’ growth remained low, expanded the imbalance between supply and demand in shipping capacity in containership business; and in addition, a decrease of demand following Chinese economic deceleration in dry bulk business brought sluggish market,” K Line explained in a release.

Finally, NYK also slashed its full year forecast by nearly 50% while announcing its third quarter results today. NYK recorded a $277.5m extraordinary loss in the third quarter as it cut the book value of its fleet, especially its dry bulk vessels.

NYK’s full year profit forecast now stands at $207m, down from an earlier projection of $384m. On dry bulk, NYK said it was trying to cut its spot exposure as well as using slow steaming as much as possible.

“NYK Line revised its forecast of consolidated financial results because conditions in the maritime shipping market have been more sluggish than originally foreseen, and the performance of its container shipping and dry bulk transport businesses is expected to be lower than previously forecast,” the company said.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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