Japan’s Mitsui O.S.K. Lines (MOL) said it will focus this year on providing value-added services and diversifying into and investing in new fields of growth as it deems the shipping industry to be headed for choppy waters this year.
In his New Year message on the MOL website, company president Koichi Muto said that, last year, the shipping line sought to restore profitability by concentrating on business restructuring and cost reductions, and will focus on strengthening its financial position this year by adopting a strategy of growth.
“With no immediate prospects for any appreciable increase in market prices in the marine transport industry, MOL must be mindful of the added value it can generate and the services it can sell,” he said.
The carrier’s growth strategy, he added, will include investing in the growing fields of the LNG carrier and offshore businesses, as well as graduating from reliance on market conditions “by providing customers with more sophisticated added value.”
Other areas of focus: new opportunities in transportation following the shale revolution and implementation of shipping-related environmental regulations, as well as emerging opportunities in terminal operations.
Muto said the company expects the seaborne trade setting to remain challenging.
“In 2013, while some emerging economies showed signs of a slower pace of growth, the global economy recovered on the whole, centered on developed countries, and we saw steady growth in seaborne trade volume,” he continued.
“As the supply of new vessels declined, the supply-demand gap for vessels gradually started to improve. However, given that excess shipbuilding capacity remains, even if freight rates rise in the next few years, the increase could be subdued.”
Muto also anticipates some risks in the months ahead, including the possibility of “seaborne trade volume to China peaking out in the future, and a reduction in ton-miles driven by the shift to local production, local consumption, as exemplified by completed vehicles.”
He added that MOL is likewise “facing major upheaval in the business environment,” including shorter contract periods, the shift of customers to Asia, and the entry of new players.
Other developments to watch out for include burgeoning growth in market-linked contracts and changing trade patterns, he said.