Container business was hampered by overcapacity caused by the delivery of ultra-large containerships, depreciation of the euro and an economic slump in Europe, according to ocean carrier NYK.
Japan’s three largest shipping companies, NYK, MOL, and “K” Line released financial statements for the first six months of their fiscal year Friday, reporting mixed results. All three carriers have fiscal years that run from April 1 to March 31.
NYK
NYK reported profits of 54.8 billion yen ($455 million) in the first half, which ended on Sept. 30, compared with 20 billion yen in the same 2014 period.
Revenues in the first half of its fiscal year were 1.2 trillion yen, up 1.6 percent from the first half of 2014. NYK’s liner division had a profit of 7.8 billion yen in the first half of the fiscal year compared with 4.9 billion yen in the same period the prior year.
“In the container shipping division, despite the appearance of a downward trend in North American shipping route freight rates attributable to increased supply capacity in overall trade, cargo movement originating in Asia was favorable, leading to comparatively robust conditions,” said NYK.
“However, in addition to a spate of ultra-large containership deliveries on European routes, the depreciation of the euro and an economic slump in the European region amid lower demand for cargo to Europe caused spot freight rates to decline, resulting in a challenging business environment.
“In terms of services, we realigned Central and South America routes and to increase efficiency and enhance cost competitiveness,” the carrier added.
MOL
MOL posted a loss of 241 million yen in the first half of the current fiscal year compared with a profit of 11.5 billion yen in the same 2014 period.
Revenues in the first half of the current fiscal year were 905 billion yen, compared with 890 billion yen the previous year.
MOL’s container division reported profits of 29.1 billion yen in the first half of the fiscal year compared with 16.6 billion yen in the same period the prior year. Revenue for the container division was 390.1 billion yen in the first half of its fiscal year, up slightly from 384.9 billion yen in the first half of 2014.
“On transpacific routes, although cargo volumes from Asia were firm, the freight market fell. On Asia-Europe and Asia-South America routes, cargo volumes from Asia weakened and despite efforts to reduce the supply space by reducing vessels, the gap between supply and demand could not be reduce and the freight market deteriorated,” said MOL.
“The freight markets on Intra-Asia routes also slumped as the cargo volumes were weak,” added MOL. “Although the bunker price fell and the division’s ordinary loss improved year on year as a result of our efforts to cut operation costs by rationalization of routes and implementing slow steaming under this business environment, a loss was recorded.”
“K” Line
“K” Line reported profits fell 44.8 percent to 11.7 billion yen ($97 million) in the first half of the current fiscal year compared with profits of 21.2 billion yen in the same 2014 period.
Revenues in the first half of the current fiscal year were 668 billion yen, compared with 669 billion yen the year before.
“K” Line’s container division posted profits of 3.1 billion yen in the first half of the fiscal year compared with 9.5 billion yen in the same period the prior year. Revenues for the containership division stood at 337.6 billion yen in the first half of its fiscal year compared with 329.5 billion yen in the first half of the prior fiscal year.
“During the six-month period, cargo volume loaded on the Asia-North America service for round-trip voyages recorded solid growth and increased by around 6 percent year on year, supported by a firm undertone in the U.S. economy,” said “K” Line. “However, cargo movements stalled in the Asia-Europe, Intra-Asia, and North-South services, where cargo volume loaded declined by over 10 percent, partly reflecting the continued cut-back in sailings in response to a drop in demand. Overall cargo volume loaded for the Group declined by around 6 percent year on year.”
The company added, “As the freight rate market declined due to deterioration in the supply-demand balance, the group’s average freight rate also declined year on year, especially in the Asia-Europe and North-South services. Despite taking cost-cutting measures such as slow steaming and enhanced container inventory control, the group recorded a year on year increase in revenue and a decline in income for the six-month period.”
