Japanese Giants Report Growth in Run-Up to ONE


Nippon Yusen Kabushiki Kaisha (NYK), Mitsui O.S.K. Lines (MOL) and Kawasaki Kisen Kaisha (K Line), the three Japanese shipping conglomerates proposing a merger into the Ocean Network Express (ONE), have all increased profits and revenues for the first quarter of their 2017 fiscal year.

All three companies’ container segments posted a year-over-year boost in revenues for the period, which ended June 30, 2017, compared to the corresponding quarter a year prior.

NYK reported a profit of US$48.9 million, with ocean container business revenues up 21.3% year-over-year, amounting to approximately $1.5 billion.

The tenth biggest carrier attributed the growth to a reduction in fleet and operating costs through efficiencies made in cargo-loading, new highly fuel-efficient vessels, and optimized vessel assignment and economic performance.

MOL’s profit stood at around $47.5 million, soaring 274.8% from 2016’s first quarter, with containership revenues reaching around $1.63 billion, up 12% and 22.4% year-over-year.

The eleventh biggest containership operator said that cargo trades from Asia to North America were at record-high volumes due to a resilient US economy.

It also reported an increase in backhaul volumes from Europe to Asia.

K Line, the fourteenth largest container shipping company, reported a profit of $77 million, compared to a loss of $242 million for the first quarter of 2016, and that its containership operating revenues had surged 20.4% year-over-year to around $1.33 billion.

Cargo handling volumes increased by approximately 7% year-over-year.

The three container shipping companies’ formation into THE Alliance a vessel sharing agreement on major east-west trades with Hapag-Lloyd of Germany and Yang Ming of Taiwan on April 1, 2017, has had a positive influence on growth.

More consolidation is expected once regulatory bodies approve the Ocean Network Express, which is planned to start on April 1, 2018.

The joint venture will integrate the three companies’ container shipping businesses, including worldwide terminal operations businesses, but excluding those in Japan, according to the carriers.

MOL said it expected the global economic outlook to continue its “smooth recovery” past the second quarter and beyond.

It added: “While we assume the economies of developed countries such as the US and Europe to continue to recover robustly, we assume an economic slowdown in China to be limited to a gradual pace.

“However, recognizing such risks as the tightening of fiscal policy and interest rates rising in the United States, China’s economy slowing more than expected, and the general uncertainty surrounding the difficult negotiations ahead for the United Kingdom’s exit from the EU, we foresee a continuation of the current unpredictability of the situation.”

 K Line also stated: “Political risks such as the delay in the realization of the US administration’s policies, as well as geopolitical risks such as increased tension in the Middle East and North Korea mean an unstable situation will likely continue for some time.”

NYK Group's CEO was recently announced as the head of ONE.

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