Leading Japanese shipping lines, NYK, K Line and Mitsui OSK Lines announced mixed results on Thursday, but all three reported tough times in shipping and air freight.
For NYK Line, container shipping profits “improved dramatically from the same period of the previous fiscal year as a result of the restructuring of services on European and other major routes through shipping alliances, along with repeated attempts to restore and maintain rates,” although the business still saw a loss of ¥5.3bn for the third quarter.
K Line saw a 5% increase in its container volumes overall and, combined with cost cutting including new fuel efficient ships, saw the business edge into a ¥2.9bn profit.
Mitsui OSK Lines experienced similar market conditions, but despite higher revenues, the company recorded a loss of ¥10bn for the first nine months; although this halves the loss experienced for the same period of last year.
Other sectors such as bulk shipping also continued to see poor market conditions and increasing losses. In contrast, the car-carrying shipping business of all three companies reported higher profits, although Mitsui OSK differed from its two rivals in reporting flatter demand both out of Europe and Japan. Elsewhere, this trade is also growing quite strongly.
The car-carrying business is currently atypical of the shipping industry, not because demand is so much higher, but there is not an oversupply of vessels. All three companies report that both container and bulk trades are increasingly flooded with new vessels.
NYK, a diversified logistics provider as well as shipping company, is also continuing to suffer from poor profitability at its Nippon Cargo Airlines business, which is experiencing a slump in demand in its core routes out of Japan. The Yusen forwarding and logistics business has also suffered with lower volumes in air freight and higher costs in sea freight. Operating profits more than halved to ¥2.8bn for the first nine months.
Although NYK and “K” Line have managed to climb back into the black, whilst Mitsui OSK is expecting a substantial loss for the year, this is largely due to the companies’ varying abilities to manage costs rather than any differences in strategy; although Mitsui OSK’s greater exposure to bulk shipping is also important. Judging by these results, the container shipping market is still on a knife-edge with the continuing prospect of new tonnage entering the market in the face of indifferent demand.
¥100 = US$1.08/0.79