Mitsuo O.S.K. Lines (MOL) president Koichi Muto said his company is preparing for “a prolonged harsh business environment” in 2012, during which period the large-scale completion of new vessels is expected to continue.
“The management environment surrounding MOL remains unpredictable and clouded by imminent oversupply of vessels as more new ships reach completion, and slumping business sentiment,” Muto said in his New Year message.
“These factors are expected to impact containership operations, especially, where conditions are extremely harsh with the impending completion of a large number of ultra large containerships, and the prolonged slump in the economies of Europe and the U.S.A,” he added.
Muto described 2011 as a year of momentous events, with the Japan-based company reporting its biggest loss ever during the first half of fiscal year 2011.
He attributed the setback mainly to the Japan earthquake in March last year, and partly to the effects of the strong yen, high fuel prices, downward pressure on the market due to oversupply of shipping capacity, and a decline in demand caused by the economic downturn.
But he believes that there will be “some light at the end of the tunnel” after 2013, when the number of new vessels completed is expected to level off.
“Over the medium to long term too, we predict that the excessive production capacity of shipyards in China, 2/3 of which is privately operated, will be brought into balance by the market mechanism, and we expect the oversupply of ships to be relieved.”
To survive in the current situation, Muto said the shipping line will strengthen four key areas that together form the foundation of trust of its customers: safe operation, sound financial position, higher quality of transport services, and sales power.
Muto insisted there are still opportunities for growth even in “an extremely difficult business environment.” For its container operations, he pointed out that the carrier’s participation in the newly formed Grand Alliance in the Asia-Europe trade is one of the various seeds of growth they have planted.
“Going forward I believe it will be important for us to seek any opportunities for partnership with all kinds of partners, and work with them to improve the efficiency of operations through benefits of scale.”
Muto said they will be formulating their next midterm management plan this year, to take effect from fiscal 2013, “that will enable us to produce changes that will create tomorrow.”
