Japanese carriers benefit from bulk shipping
Japan’s three large shipping companies — NYK, MOL and “K” Line — all reported better results for the periods ending September 30, when compared to the prior year, largely because of improvements in bulk shipping operations. All three carriers all use a fiscal year that ends on March 31.
They reported continued weakness in the liner industry.
NYK. NYK said net income for the second quarter of its 2013/14 fiscal year was 11.9 billion yen ($121 million), compared with a loss of 2.8 billion yen in the same period last year despite a small loss in its liner business. NYK said results were better than it had forecast because “extraordinary income arising from the sale of noncurrent assets, mainly vessels, and the sale of investment securities was higher than initially anticipated in the favorable market conditions.”
It also said operating income and recurring profit increased due to yen depreciation and lower bunker prices.
Revenue was 560.6 billion yen in the second quarter of 2013/2014, compared with 466.4 billion yen a year earlier.
NYK is involved in the liner shipping, air cargo, logistics, bulk shipping, cruise, real estate and other industries. NYK’s liner segment had a loss of 0.2 billion yen in the second quarter, compared to a 3.4-billion yen profit in the same period a year earlier. Liner revenue was 155.8 billion yen in the second quarter, compared to 137.9 billion in the same period a year earlier. The company noted results previously classified as terminal and harbor transport have been folded into the liner results for 2013.
NYK’s bulk shipping operation had recurring profit of 11.6 billion yen the second quarter compared to just 3.6 billion a year earlier.
On the Asia to North America trade route, NYK said it lifted 179,000 TEU in the second quarter compared to 171,000 in the second quarter last year. Utilization rose to 88 percent on the trade lane, compared to 86 percent in the second quarter of 2012. But freight rates were lower: The company said a container freight index set at 100 in 2009 was at 96 in the second quarter of the current fiscal year, compared to 107 a year earlier.
In the Asia to Europe trade route, liftings were 135,000 TEU (utilization of 93 percent) in the second quarter, compared with 138,000 TEU (utilization of 92 percent) a year earlier. The rate index on the Asia-Europe trade lane fell dramatically to 73 in the second quarter of the current fiscal year from 84 in the second quarter of the prior year.
MOL. MOL said net income for the second quarter of its 2013/14 fiscal year was 8.2 billion yen, compared with a loss of 8.1 billion yen in the same period a year earlier. MOL’s revenue was 433.3 billion yen in the second quarter of 2013/2014, compared with 378.1 billion yen a year earlier.
Commenting on its liner operations, MOL said “Following a fall in freight levels from the beginning of spring due to an increase in deliveries of large containerships, we worked to restore freight rates by such means as rationalizing our services, and there was a temporary recovery on certain routes. The falls in rates for the Asia-Europe and North-South routes were particularly severe. The transpacific and Asia-Europe routes were also affected by weak cargo volumes. Against this background, although we worked to reduce operating costs and improve operating efficiency, a loss was recorded in this segment for the first six months.”
MOL said the loss in its container segment for the first six months amounted to 3.7 billion yen, compared to a loss of 2.6 billion yen in the first six months of the prior fiscal year. That bigger loss came despite revenues in the first six months of 357.1 billion yen, a 17.6 percent increase over the same period the prior year.
“K” Line. “K” Line said it had a profit of 14.7 billion yen in the first half of the current fiscal year, compared to a loss of 1.1 billion yen in first half of the prior year. Revenue in the first half of the current fiscal year was 606.6 billion yen, compared to 546.2 billion yen in the previous period. It did not break out results for the second quarter.
The containership segment had an income of 1.5 billion yen in the first six months, less than half the 3.8 billion yen recorded in the same period a year earlier, even though liner revenue was 294.3 billion yen, an 8.6 percent, year-over-year improvement. “K” Line also saw a dramatic improvement in its bulk shipping operations, with operating income in the first half amounting to 21.9 billion yen, a 176-percent increase over the first half of the prior year.
“Freight rates in the containership sector went on at low levels, especially in European service routes, due to the stagnant European economy. In the car carrier business, the growth of ex-Japan cargo movements lost momentum. On the other hand, the freight rates in the dry-bulk sector substantially recovered in and after August due particularly to increased shipments of China-bound iron ore,” the carrier said.
“The number of loaded container transported in the current cumulative period by 'K' Line Group was almost the same as the number in the year-ago period in the service between Asia and North America, while approximately 9-percent less as compared with the year-ago period in the service between Asia and Europe, owing to downsizing of our service capacity to meet decreased demand stemming from weak European economies.”
The company said it carried 20-percent less cargo than last year in the inter-Asia and North-South trades “as a result of further streamlining of unprofitable service lines."
In containership business, “K” Line said it believes the U.S. is on a mild recovery trend, while uncertainty prevails in Europe. It said it “will be engaged in prudent operations under the principle of ‘selection and concentration’ through the continuous efforts for the reducing vessel operating expenditures by cutting back services in keeping with actual demand, enhancement of slow steaming, further implementation of cost cutting measures at our entire global business stations, and freight rates restoration. At the same time, we will step up route management for profitability improvement utilizing information technology.”