Home » Breaking News, Maritime » Japan’s Big 3 post gains as volumes, global trade improve

The three leading ocean box carriers of Japan announced higher revenues, with two seeing a return to profit, in the first quarter of their fiscal year (FY) 2017 ended June 30, the result of better business conditions, higher volumes carried, and cost-cutting measures.

Mitsui O.S.K. Lines (MOL) reported an increase in revenue and a reduction in ordinary loss in the first quarter of its FY2017 as the business environment brightened and volumes, particularly on the Asia-North America routes, leapt.

in a statement MOL said its container shipping line earned revenue of JPY180.2 billion (US$1.6 billion) in the first quarter, up 22.4% from JPY147.2 billion in the same period in 2016. This cut the shipping and logistics firm’s ordinary loss from JPY11.6 billion in Q1 last year to JPY6.2 billion in the comparative period this year.

“On Asia-North America routes, cargo trades from Asia were at record-high volumes due to the robust U.S. economy. On Asia-Europe routes also, cargo volume from Asia was steady and backhaul cargo volume from Europe to Asia increased,” said the company.

The strong demand led to a considerably improved spot freight rate market year-on-year, with annual contract freight rates showing an overall rise upon renewal.

“Under this business environment, the ordinary loss in the containership business was reduced year on year, also thanks to efforts through cutting operation costs by reducing the expenses of repositioning empty containers through improved yield management,” said MOL.

Looking ahead at the second quarter and beyond, the company said it assumes that the world economy will continue on its smooth recovery but does not discount the risks to this forecast and the continued general unpredictability in global developments.

For the containership market, MOL said, “The July-September period marks the busy season for many routes, particularly the mainstay routes of Asia-North America and Asia-Europe, due to the expanded demand for cargo volumes from Asia for the Christmas trading season, etc.

“Consequently, we assume the spot freight market will rise a certain degree over summer. Currently, cargo volume demand is proceeding robustly on all fronts. However, we will need to continue to pay close attention to the global economy and cargo volume trends.”

NYK Line reverts to profit

Meanwhile, Nippon Yusen Kabushiki Kaisha (NYK Line) reported revenue growth of 31% for its container line in the first quarter of FY2017 and a reversal to profit from the previous loss.

NYK said its box liner trade business recorded revenue of JPY171.5 billion in the first quarter of FY2017 compared to JPY141.4 billion in the same quarter last year. Recurring profit for 1Q 2017 reached JPY5.7 billion, a turnaround from a loss of JPY8.8 billion last year.

“Conditions in the container shipping market improved owing to brisk shipping traffic and steady spot rates along European shipping routes. Other shipping routes also mostly recovered, including routes in Central and South America. Shipping traffic was brisk along transpacific routes, however, the supply of tonnage increased, delaying a recovery in the market,” explained the company.

K Line achieves volume expansion

For Kawasaki Kisen Kaisha (K Line), its containership business segment (container shipping and logistics) recorded overall year-on-year increases in revenues and regained positive earnings in the first quarter of the current fiscal year.

Operating revenues for this segment rose 20.4% to JPY147.2 billion in Q1 2017 from JPY122.2 billion in Q1 2016. Segment profit in the first quarter amounted to JPY6.1 billion, a reversal from a loss of JPY12.3 billion in the same period of 2016.

“In the containership business, solid cargo movements were seen in the East-West services and Intra-Asia services. The Group achieved the handling volume increase of approximately 6% in the Asia-North America services, approximately 9% in the Asia-Europe services, and approximately 17% in the Intra-Asia services year on year while there were decreases by 5% year on year in the North-South services, which is mainly due to termination of the South America-East Coast services.”

As a result, it said, cargo handling volume increased by about 7% year-on-year. The freight rate market recovered, reflecting steady cargo movements, and profit rose year-on-year, with the containership business regaining positive earnings.

Logistics, on the other hand, posted an increase in handled international volume for air cargoes, leading to overall year-on-year increase in both revenues and profit.

Photo: lotsemann 

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