Thursday, July 31, 2014

JAPANESE CONTAINER LINES FINANCIALS

From American Shipper--


Japanese container business suffers from overcapacity, low rates



PREMIUM

Thursday, July 31, 2014
   Japan's three largest shipping companies — NYK, MOL, and "K" Line — reported mixed results for the fiscal first quarter, which ended June 30 for each of the companies.
   Officials for each company noted in results releases that the container shipping industry continues to suffer from low rates and over capacity. All three benefited from their diversification into other areas of shipping and logistics.

NYK.   NYK said it had a profit of 10.2 billion yen ($99.8 million) in the first quarter, compared with 8.6 billion yen in the same period last year. Revenue was higher — 582 billion yen in the first quarter of the current fiscal year, compared with 528.5 billion yen the prior year.
   The company's liner business had a smaller loss — about 0.1 billion yen — when compared with the 0.6-billion yen loss recorded in the same 2013 period. Liner revenue was up 12.4 percent to 166.8 billion yen, compared with 148.5 billion a year earlier.
   NYK said that "in the container shipping division, although cargo volumes rose overall, freight rates declined due to the delivery and deployment of ultra-large container ships, mainly on European routes, which caused older large vessels to be shifted to other routes and worsen the supply-demand balance.
   "In regard to services, the G6 Alliance achieved further consolidation and enhancement of the services network by expanding the alliance to North America West Coast routes and transatlantic routes." Other members of the G6 Alliance are APL, Hapag Lloyd, Hyundai, MOL, and OOCL.
   The carrier said it worked toward a low-cost fleet by using short-term charters and retiring older vessels in favor of newer, more fuel-efficient ships. "Thorough measures were also taken to efficiently assign vessels and prevent unnecessary costs," it said. "These included assigning vessels to match the attributes of each type of service, and effectively utilizing surplus vessels and charters to reduce schedule delays."
   NYK called the shipping environment "severe" because a surfeit of ships is putting continued downward pressure on rates.
   "In response," it said, "the NYK Group strove to further reduce fleet and operational expenses by rationalizing the fleet assignments and reducing fuel costs. In the non-shipping businesses, signs of a rebound in Japan-originated airfreight volume emerged in the air cargo transportation and logistics businesses. The cruises business was robust during the period.

MOL.   MOL reported a profit of 8.5 billion yen ($84 million) in the first quarter, 34.2-percent less than the 12.9 billion earned in the same period a year earlier.
Revenue was 443.9 billion yen in the first quarter, up 7.8 percent from 411.9 billion yen in the first quarter last year.
   The company said its containership business had a 7.2-billion yen loss in the first quarter, up from a loss of 1.1 billion yen in the first quarter of the prior fiscal year. Revenues, however, rose 12.7 percent to 187.8 billion yen in the first quarter of this year, from 175 billion yen.
   MOL said in container movement on the transpacific and Asia-Europe routes were both stable, but that "a recovery in freight rates, which have slumped due to factors including continued deliveries of large vessels, remained elusive."
   The company said, "Although Intra-Asia routes were affected by unstable factors such as political unrest in Thailand and strikes at Chinese-managed factories in Vietnam, overall cargo volume was steady."
   MOL saw cargo volume decline on South American routes, which it said was a reflection of Argentina's economy. It said there was a "considerable slump" in freight rates on the South America East Coast route.
   MOL said it has "worked to strengthen competitiveness by such means as cutting costs through deliveries of large vessels and expanding new cooperative vessel allocations through alliances on the transpacific and Atlantic Ocean routes."

"K" Line.   "K" Line said it had a profit of 4.28 billion yen ($42.2 million) for the quarter, compared with 6.98 billion yen a year earlier.
Revenue was 319.8 billion yen in the first quarter, compared with 295.7 billion yen a year earlier.
   In its containership business, "K" Line reported a profit of 2.2 billion yen, compared with a slight loss the prior year, while revenues grew 11.7 percent to 158.4 billion yen, compared with 141.9 billion yen a year earlier.
   "K" said, "In the containership business, while there is uncertainty in the development of tonnage supply-demand because of deliveries of newly-built, large-size vessels, we expect a recovery of freight rates to a certain level in summer peak season."