The three major Japanese container lines, Mitsui O.S.K Lines, “K” Line and NYK Line, all reported improved container shipping revenues in the six months from April through September but saw profits veer in different directions. The results showed the effects of limited improvement in Asia to Europe rates but revealed challenges in port congestion in Asia and cascading of larger ships into north-south trades as carriers continue to take delivery of mega-vessels.
“Although cargo volumes rose overall, freight rates declined due to the delivery and deployment of ultra-large container ships, mainly on European routes, which prompted a shift of older large vessels to other routes and caused a continued oversupply of vessels,” NYK Line said in a discussion of its results in which it described an intensive effort to cut costs through various forms of fleet optimization. The Japanese carriers are today relatively small players in container shipping, with a combined 7.8 percent share of global deployed capacity, less than the individual shares of the world's three largest carriers, Maersk, Mediterranean Shipping Co. and CMA CGM, according to Alphaliner.
K-Line reported 12 percent growth in container shipping revenue from $2.69 billion (294.3 billion yen) to $3.02 billion in the six months from April through September 2014 versus the year earlier period. It saw income in the segment rise from $13.7 million to $87.1 million. It saw liftings rise 8 percent in Asia to Europe and Asia to the America and drop by 2 percent in intra-Asia and on north-south routes.
MOL saw a 7.8 percent revenue increase from $3.27 billion (357.1 billion yen) to $3.53 billion. It reported a loss of $99 million, versus a $34 million loss in the six month 2013 period.
NYK saw a 13 percent increase in liner revenues from $2.78 billion to $3.55 billion in the same period, and saw an increase in segment profits from $7.3 million to $33.9 million.
North-south routes were also an area of challenge for MOL, which said “on North-South routes the freight market experienced a substantial downswing due to a slump in cargo volume, particularly in cargo bound for the South America East Coast.”
The challenges posed for carriers in north-south rates is tied in to cascading as mega-vessels continue to be delivered into the main linehaul trades. According to NYK, “freight rates declined due to the delivery and deployment of ultra-large container ships, mainly on European routes, which prompted a shift of older large vessels to other routes and caused a continued oversupply of vessels.”
In reporting higher losses in the six-month period versus the year-earlier period, MOL in published earnings results cited port congestion in Asia which could not be offset by further efforts to cut costs through slow steaming. “Although intra-Asia routes were comparatively stable underpinned by strong demand, it was necessary to review operations plans due to vessel congestion at various ports in Asia.”