“K” Line to shrink container fleet while expanding others

“K” Line to shrink container fleet while expanding others

"K" Line ship stack

Japan’s third-largest shipping line, Kawasaki Kisen Kaisha, announced Monday it would be beefing up its LNG and bulker vessels over the next four years, while downsizing its container shipping fleet.

“K” line said it will invest 330 billion yen, or about $2.75 billion, to upgrade its fleets between 2015 and 2019. The shipping line said it plans to add 13 vessels to its 526-ship fleet in fiscal year 2017 and another 25 in fiscal 2019.

Gains will largely be seen in the line’s LNG and bulker fleets, as the company scales back its container shipping force. The company said it expects to downsize its 70-ship container fleet to 66 ships in fiscal year 2017 and to 61 ships in fiscal 2019.

The company announced late last year it would focus on growing other shipping segments while cutting costs to keep its container business viable. “K” Line has ordered 10 14,000-TEU container ships, but those vessels will replace older and less fuel-efficient ships.

"In terms of businesses that contribute to a more stable earnings structure, 'K' Line has particular strength in dry bulk carriers, car carriers and LNG carriers,” CEO Jiro Asakura said in the “K” Line’s annual report in September. “We hope to make these particular areas even stronger.”

“K” Line has reported mixed results from container shipping and said profitability has taken a hit from U.S. West Coast port congestion of late. “K” Line raised its full-year profit to 25 billion yen last year, up 16.3 percent. The company cited rate restoration in Japan-North America routes in an otherwise sluggish bulk market, a weaker yen, as well as cost-cutting in container shipping.

To continue keeping its container line on track while other midsize carriers such as MOL suffer losses, Asakura has said the carrier plans to enhance slow-steaming to reduce fuel costs.

“K” Line said it plans to add four vessels to its 43-ship LNG fleet in fiscal 2017 and another 14 in fiscal 2019. Those numbers include LNG carriers it co-owns with other companies, the company said.

The Japanese line said it also plans to expand its bulker fleet from 218 to 226 ships in fiscal 2017 and to 239 in fiscal 2019. Bulker expansion will include boosting the company’s Capesize and post-Panamax bulker fleets. “K” Line said it will add four vessels to its 85-ship Capesize fleet in fiscal 2017 and an additional 11 ships in fiscal 2019. The line’s post-Panamax fleet will expand from its current 69 vessels to 71 in fiscal 2017 and to 75 in fiscal 2019.

“K” Line also said it plans to add two more ships to its car carrier fleet to bring it to 98 ships by fiscal 2019.

A version of this article originally appeared on IHS Maritime 360, a sister title to JOC.com within IHS Maritime and Trade.