Overall revenues for NYK, MOL and “K” Line fell 5.4 percent, 6 percent and 8.1 percent, respectively, for the last fiscal year ended March 31, 2016.
Japan’s three largest shipping companies all reported losses in their container transport operations in the fiscal year that ended March 31, 2016.
NYK, MOL and “K’ Line, which all have diverse operations in many segments of the shipping industry, also reported lower overall revenues in the 2015-2016 fiscal year when compared to FY 2014-2015.
All three companies have fiscal years that run from April 1 to March 31.
NYK
NYK Line, the country’s largest shipping company, reported total revenues of 2.27 trillion yen (U.S. $20.2 billion at the March 31 exchange rate) for the year ending March 31, 2016, a 5.4 percent drop from the prior fiscal year. It had a net profit attributable to the owners of the parent company of 18.2 billion yen in FY 2015-16, a 61.7 drop from the prior year. Operating income in FY 2015-16 was down 26 percent year-over-year to 49 billion yen.
NYK said while the economies of the U.S. and Europe improved, that of China slowed “and the economic environment became unstable with various economic indicators worsening due to sluggish demand.”
“Economic growth in other emerging countries was negatively affected by declining prices of finished products, which reflected falling prices of crude oil and other resources along with the problem of excess production capacity,” the carrier added. “In Japan, the economy benefitted overall from the depreciation of the yen in the first half of the fiscal year, but owing to the yen’s appreciation from the third quarter, the economy had yet to make a full-blown recovery.”
The company said “the steady appearance of newly built ultra-large container ships has been driving an oversupply of tonnage in the container shipping market. At the same time, conditions in the shipping market as a whole severely stagnated as declining demand for freight shipments for Europe-bound routes widened the gap between supply and demand.”
NYK liner revenues stood at 696.3 billion yen in the 2015-16 fiscal year, a 1.4 percent increase over the prior year, but liner operations posted a loss of 300 million yen, compared to a 9.8 billion yen profit the previous period.
Usage of large new ships in Europe “has caused a chain reaction worldwide as increasingly larger capacity ships have entered other shipping routes, severely disrupting the balance between supply and demand,” the company said.
“Without reorganizing the main routes it handles as a member of the G6 Alliance, the Group rationalized its services according to demand, reorganized routes in Asia and along the East Coast of South America in order to make them more efficient, and suspended service for some unprofitable routes,” it added.
NYK, which has diverse operations in many segments of the shipping industry, noted, “Conditions in the liquid division were favorable, however, in the dry bulk division, spot freight rates fell to historical lows against the backdrop of falling raw material prices, contraction of steel and other materials and the economic slowdown in China.”
The shipping conglomerate said it “worked to generate profits from businesses in which freight rates are stable, while continuing to further improve its balance of income and expenditures through a number of measures, including reorganizing container shipping routes, and selling off and returning unprofitable vessels, particularly dry bulk carriers.”
NYK’s non-shipping businesses performed strongly, with the air cargo transportation and logistics segments “both recording solid results.”
MOL
MOL posted revenues of 1.71 trillion yen for the year ending March 31, 2016 compared with 1.82 trillion yen the prior year. MOL had a net loss attributable to the owners of the parent company of 170 billion yen versus a 42.4 billion profit the year before. Its operating income was 2.3 billion compared with a 17.3 billion the prior year.
MOL also said, “The containership freight market remained extremely weak on all routes, reflecting the low cargo volumes particularly from Asia to Europe and South America as well as deliveries of very large container ships.”
MOL recorded containership revenues in FY 2015-16 of 721.1 billion yen, an 8.6 percent decline from the prior year. And losses from its containership segment widened – MOL posted an ordinary loss of 29.8 billion yen in FY 2015-16 compared with an ordinary loss of 24.1 billion yen the prior fiscal year.
“On transpacific routes, although cargo volumes from Asia were firm overall, the supply-demand balance weakened because of the increased in the supply of vessels, and the freight market significantly fell on both routes to the West and East Coasts of North America,” the company said.
On Asia-Europe routes, cargo volumes weakened and despite efforts to scale-down supply by reducing sailings. MOL said the gap between supply and demand could not be closed and freight rates were at record lows throughout the fiscal year. Rates to South America were also at record lows as container volumes fell due to the economic slowdown in Brazil. MOL said intraAsia routes also saw a slump in cargo volumes.
“K” Line
“K” Line saw fiscal year revenues fall to 1.24 trillion yen from 1.35 trillion yen the prior year. The company had a net loss attributable to the owners of the parent of 51.5 billion yen compared with a profit of 26.8 billion yen a year earlier. Operating profit stood at 9.4 billion yen in the 2015-2016 fiscal year compared with 48 billion yen the prior fiscal year.
“K” Line’s containership segment had revenues of 614.9 billion yen in FY 2015-16, a 9.2 percent drop from the prior year, posting a loss of 10 billion yen in FY 2015-16, compared with a profit of 20.6 billion the prior year. Overall container volumes were down 5 percent.
The company said it has “strengthened its competitiveness by completion of five new large-sized vessels with loading capacity of 14,000 TEUs, while continuing various cost reducing efforts, such as reducing space and sailings on the Asia-Europe service in response to a decline in demand, rationalizing the North-South and Intra-Asia services, and cutting the cost on forwarding empty containers.”
