[EN-SEA] "NYK" Mulls Box, Air Freight Exit if Losses Persist

NYK president Yasumi Kudo has warned "it will become difficult to maintain our liner trade and air cargo business," if deficits persist.

To return to profitability during the second half of the current fiscal year, NYK's operating fleet has been cut from 115 containerships of 410,000 TEU to 90 vessels of about 360,000 TEU in the last year.

Two of the company's 10 aircraft have been mothballed while "superfluous" warehouse space - mostly in Europe - has been cut from 850,000 to 760,000 square metres and the truck fleet has had 1,100 vehicles removed from 1,500 units.

As far as the group's container vessels go, which constitutes long-term fixed assets, NYK plans to halve the number of ship and reduce the total capacity by one-third by 2015.

"I believe that emphasis should be placed on "non-asset" operations for the time being, in the course of our efforts to augment liner trade and air cargo transport businesses," said Mr Kudo in his New Year's speech.

"This by no means rules out owning of container vessels and airplanes," a factor deemed necessary given that "the recent recovery in the air cargo transport sector has been accompanied by a sharp rise in customer inquiries and contracts for charter flights.

But a lack of adequate hardware will make it impossible to properly cope with such a demand," he said.

"Furthermore, because ocean transport is a growth industry from a medium- and long-term perspective, there is the strong possibility that the supply-demand balance will settle down if operators learn enough from their recent bitter experiences and accept slow steaming as normal practice to deal with soaring fuel prices and environmental problems."

"Nonetheless, these surplus-reduction measures do not restore profits, especially in the liner trade and air cargo. It is necessary to raise freight rates to the proper level," he said.

"Fortunately, our rate restoration efforts have started to score a measure of success since the summer of last year."

Mr Kudo said the chief task this year will be to "hasten the restructuring of our business towards turning our liner trade (and) air cargo transport businesses into 'sustainable' business models."

Source : HKSG, 06.01.10.