GOOD REVENUE NEWS FOR JAPANESE CONTAINER LINES

Revenue soars for Japanese lines in Q1 as they eye new alliance

By Mike Wackett

31/07/2017

Ahead of their integration into the Ocean Network Express (ONE) next April, the container liner businesses of Japan’s NYK, MOL and K Line all produced improved results in the three months to 30 June – their financial first quarter.
NYK, the biggest of the trio, and with a 38% stake in the ONE alliance, saw its liner trade revenue leap 21.3% on the same period of 2016 to ¥171.5bn ($1.54bn) resulting in a 14.5% swing back into the black of ¥5.7bn ($5.1m).
MOL, which like K Line will have 31% of ONE, also saw its turnover surge, by 22.4% on the same quarter of the previous year, to ¥180.2bn ($1.62bn), but it was still unable to convert this into profit, albeit the loss of ¥6.2bn improved on the ¥11.6bn deficit previously.
Meanwhile, the turnover for K Line’s container business jumped 20.4% in the quarter, compared with the previous year, to ¥147bn ($1,32bn) propelling the carrier back into the black, with a profit of ¥6.1bn for the quarter, against a loss of ¥12.3bn suffered the year before.
NYK said: “Conditions in the container shipping market improved owing to brisk shipping traffic and steady spot rates along the European shipping routes.”
It added that other routes had “also mostly recovered”, which it said included tradelanes in Central and South America, but a tonnage increase on the transpacific routes “was delaying a recovery in the market”.
NYK said: “The group worked to limit fleet and operating costs by continuing efforts taken in the previous fiscal year to boost cargo-loading efficiency, switch to new highly fuel-efficient vessels with capacity for 14,000 teu, and optimise vessel assignment and economic performance. By implementing measures for cutting freight costs, particularly the efficient operation of container ships, the group improved profitability and its resistance to market fluctuations.”
MOL said it carried “record high volumes” from Asia to the US during the period, while Asia to Europe volumes were “steady” with backhaul liftings at increased levels.

“The spot freight market proceeded at a significantly improved level compared with the same period of the previous year.”
It added that annual contract rates “showed an overall rise upon renewal” and this combination, along with its continued cost-cutting measures, enabled MOL to reduce its loss in the sector.
K Line said its liner business had seen “solid cargo movements” on east- west and intra-Asia services, handling 6% more containers between Asia and North America, 9% more on Asia-Europe and an impressive 17% more on intra-Asia.
This however had to be tempered against a 5% decrease in volume on K Line’s north-south routes, primarily due to the termination of its South America east coast services.
These much improved sector results in the second quarter of the year, when the majority of new higher rated contracts began to be recorded in voyage results, is further evidence of a return to profit in the liner industry.