A rebound in container volume and rates has NYK Line, MOL and “K” Line profitable again and more optimistic about the months ahead.
Container rates have increased “thanks to a tighter balance of fleet supply and demand, supported by resurgence in cargo trade on the heels of the global economic recovery,” MOL said.
|The profits for Japan’s Big 3 ocean carriers in the fiscal first quarter ending June 30 represent a turnaround from their collective operating losses of $1.87 billion on container shipping in the 2009 fiscal year. All three carriers raised their full-year profit forecasts.
Their optimistic projections came amid growing signs of weakness in Japan’s economy, which was supplanted by some measures this summer by China as Asia’s largest economy and the second-largest in the world. Industrial output fell 1.5 percent in June, and the yen gained strength against the dollar this month, posing a threat to exports.
Japan’s exports grew 27.7 percent year-over-year in June, although the country’s outbound shipments fell 1.8 percent from May.
But global shipping markets carried MOL to a 33.5 percent jump in group revenue to 397 billion yen ($4.49 billion), $441.9 million in operating income and $235 million in net profit. That compared to operating and net losses of $117.8 million and $110.4 million, respectively, a year earlier.
NYK’s consolidated revenue rose 32.8 percent to $5.7 billion. Operating income and net income totaled $393.9 million and $259.8 million, reversing year-earlier operating and net losses of $241 million and $167.2 million.
“K” Line reported a 32.3 percent increase in operating revenue to $2.868 billion. The operating profit was $260.7 million and net profit $178.6 million, after an operating loss of $117.8 million and a net loss of $110.4 million a year earlier.
The carriers boosted their revenue and profit forecasts for the current quarter, which includes the crucial August-September peak season for holiday shipments from Asia. Carriers negotiated higher trans-Pacific rates in annual contracts that took effect May 1, and have successfully imposed peak season surcharges of $400 or more per 40-foot container.
NYK raised its profit forecast 78 percent for the current fiscal year to 68 billion yen ($600 million). MOL boosted its net profit forecast 8.3 percent to $575 million. “K” Line forecasts an increase of 78 percent to $370 million.
“K” Line cited “a number of causes for concern” including the euro zone crisis and sluggish consumer and housing markets and high unemployment in the United States. “Nevertheless, as the peak season approaches, robust cargo movements are expected to continue for some time on all routes, and especially on east-west routes,” the company said in its quarterly report.
All of the Japanese carriers are diversified into dry bulk, tanker, car carrier and other markets as well as containers. Container shipping accounts for just under half of total revenue for “K” Line and MOL, and less than 25 percent of revenue at NYK, whose interests also include third-party logistics, forwarding, terminals and cruise lines.
During the April-June quarter, container shipping accounted for 69.3 percent of operating profit at MOL, 41 percent at “K” Line and 26 percent at NYK.
Container shipping revenue jumped 40.8 percent year-to-year for MOL, 39.7 percent for NYK and 30 percent for “K” Line.
NYK said container volume grew “substantially” on all routes, especially to North America and Europe, and that supply-demand fundamentals pushed rates higher. All three lines cited slow-steaming for keeping costs in check.
Bulk shipping, in the doldrums during the recession, contributed to the Japanese carriers’ improved results. Each of the carriers, however, reflected a degree of caution about the future direction of volatile bulk markets.
“K” Line said the April-June quarter opened with “robust demand” for iron ore, grain and other bulk shipments to China, but that June brought an “adjustment phase” as steel demand slackened and grain shipments hit a seasonal lull.
The Japanese carriers reported improvement in their car carrier operations, whose volume nose-dived when the recession cut into global automobile sales.
“K” Line said its 32-ship fleet of pure car carriers returned to profitability, with a 90 percent year-to-year increase in vehicle shipments. NYK said its car carrier volume rose as the division replaced six older ships.
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