Ocean Network Express, formed by NYK, MOL and “K” Line, posts $120 million loss in the quarter.
The Japanese carriers NYK, MOL and “K” Line all have reported lower revenues for the first quarter of 2018, which began April 1 and ended June 30.
Separately the container shipping company they formed, Ocean Network Express (ONE), also reported a loss of $120 million in the same period. NYK has a 38 percent stake in ONE, while MOL and “K” Line each own 31 percent.
NYK
NYK said, “While demand in the container shipping market remains firm, capacity has increased following the completion of large new ships, resulting in some standstill in the spot freight rate recovery. In the dry bulk shipping market, at the same time as the pace of new supply coming into the market is definitely slowing down, the shipping volumes of coal, grain and other cargo increased, and the market continued to gradually recover. In the group’s non-shipping businesses, logistics was strong. In the air cargo transportation segment, the shipping traffic continued to be firm, and the market remained strong.”
NYK said in the first quarter, consolidated revenues amounted to 465 billion yen ($4.15 billion), down 10.9 percent from 521.7 billion yen in the same period the previous fiscal year. It had an operating loss of 8.1 billion yen in the first quarter of this year compared with an operating profit of 3.6 billion yen in the first quarter of the previous fiscal year. The loss attributable to owners of the parent was 4.6 billion yen in the first quarter of the current fiscal year compared with a profit of 5.4 billion yen in the first quarter of last year.
NYK said because it uses the equity method for accounting, “revenues from the container shipping business will be excluded from the consolidated results from the current fiscal year. On the other hand, NYK Line incurred significant one-time costs following the termination of the container shipping business. Also, in the air cargo transportation segment, the consolidated subsidiary Nippon Cargo Airlines Co. Ltd. grounded all 11 of its aircraft in the middle of June in order to confirm the airworthiness of the aircraft.”
MOL
MOL said it had revenues of 304 billion yen ($2.75 billion) in the first quarter compared with 403 billion yen in the same period last year. Operating profit for the first quarter was higher, 3.7 billion yen compared with 1.1 billion yen in the same 2017 period. The company said it had a loss attributable to the owners of its parent of 1.68 billion yen compared to a profit of 5.2 billion yen in the same 2017 period.
“Looking ahead at the shipping market in the second quarter and beyond, although we consider that there will be an effect on the market from various trade policies of respective nations including trade friction between the U.S. and China, we anticipate at this point that the dry bulker market will proceed firmly, considering the present robustness of cargo volumes.”
MOL said, “The very large crude oil carrier (VLCC) market has been shrouded in uncertainty about vessel demand regarding what effect there will be from the re-imposition of U.S. sanction measures on Iran and OPEC’s easing of its production cuts. However, in terms of vessel supply, although the number of new vessel deliveries has remained at high levels, we anticipate favorable conditions as aged vessels are progressively scrapped due to consistently firm scrapping prices since the start of the year, despite being in an adjustment phase.”
In the product tanker market, MOL said in the second half of its fiscal year, “We anticipate a rising market underpinned by firm cargo volume specific to the winter season, particularly from increasing demand for heating oil.”
“K” Line
“K” Line had revenue of 212 billion yen ($1.9 billion) in the first quarter compared with 287 billion yen in the same period last year. It had an operating loss of 13.37 billion yen in the first quarter compared with a profit of 3.88 billion yen in the same period the prior year. The loss attributable to owners of the company was 19.27 billion yen in the first quarter compared with a profit of 8.52 billion yen in the same period the prior year.
“K” Line said, “Despite temporary market fluctuations, the market recovered on the whole in the dry bulk segment because of an improvement in the vessel supply-demand balance due to recovery in cargo movements and the easing of the pressure from the supply of new ships.
“In the energy resource transport segment, a recovery was observed in the LNG spot rate market, where the supply-demand balance improved, but the market remained weak with respect to tankers and offshore support vessels,” it said.
