Mitsubishi to Shrink Shipbuilding Business?


Further signs of the struggling shipbuilding industry have come from Japan’s Mitsubishi Heavy Industries, who could be about to shrink its shipbuilding business, according to Reuters.

A decline in orders, a fall of some 80% across the industry so far this year, resulted in a $1.01 billion loss for Mitsubishi’s ship construction business in the year-end to March, 2016.

Rumours that the company would split off its planning and design division, share shipyards with other companies and build smaller ships to reduce risk have not been confirmed or denied by Mitsubishi.

The news follows last week’s announcement by rival Kawasaki Heavy Industries’ over its possible exit from shipbuilding due to the fall in demand. Japanese shipbuilders have been hit especially hard due to the current high value of the yen, making them less competitive than their international counterparts.

The industry is suffering as a result of the fall in demand for new ships because of overcapacity in the container shipping industry. This has precipitated a fall in demand for new container and bulk carriers, while shipping lines try to rebalance their business’ supply and demand and improve freight rates. The world’s largest shipping line, Maersk, announced plans to stop ordering new ships, instead growing through acquisitions.

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