[010817.EN.SEA] Japan's Big Three Liners Bullish With Surge in Q1 Revenue

JAPAN's Big Three carriers - NYK, MOL and "K" Line - all posted improved results in their financial first quarter ending June 30 ahead of their integration into the Ocean Network Express (ONE) next April.

NYK, the biggest of the trio, and with a 38 per cent stake in the ONE alliance, saw its liner trade revenue leap 21.3 per cent on the same period of 2016 to JPY171.5 billion (US$1.54 billion) resulting in a 14.5 per cent swing back into the black of JPY5.7 billion.

MOL, which like "K" Line will have 31 per cent of ONE, also saw its turnover surge, by 22.4 per cent on the same quarter of the previous year, to JPY180.2 billion, but it was still unable to convert this into profit, albeit the loss of JPY6.2 billion improved on the JPY11.6 billion deficit previously.

Meanwhile, the turnover for "K" Line's container business jumped 20.4 per cent in the quarter, compared with the previous year, to JPY147billion propelling the carrier back into the black, with a profit of JPY6.1 billion for the quarter, against a loss of JPY12.3billion suffered the year before.

NYK said: "Conditions in the container shipping market improved owing to brisk shipping traffic and steady spot rates along the European shipping routes."

It added that other routes had "also mostly recovered", which it said included tradelanes in Central and South America, but a tonnage increase on the transpacific routes "was delaying a recovery in the market".

NYK said: "The group worked to limit fleet and operating costs by continuing efforts taken in the previous fiscal year to boost cargo-loading efficiency, switch to new highly fuel-efficient vessels with capacity for 14,000 TEU, and optimise vessel assignment and economic performance. By implementing measures for cutting freight costs, particularly the efficient operation of container ships, the group improved profitability and its resistance to market fluctuations."

MOL said it carried "record high volumes" from Asia to the US during the period, while Asia to Europe volumes were "steady" with backhaul liftings at increased levels.

"The spot freight market proceeded at a significantly improved level compared with the same period of the previous year."

It added that annual contract rates "showed an overall rise upon renewal" and this combination, along with its continued cost-cutting measures, enabled MOL to reduce its loss in the sector.

"K" Line said its liner business had seen "solid cargo movements" on east- west and intra-Asia services, handling 6 per cent more containers between Asia and North America, 9 per cent more on Asia-Europe and an impressive 17 per cent more on intra-Asia.

This however had to be tempered against a 5 per cent decrease in volume on "K" Line's north-south routes, primarily due to the termination of its South America east coast services.

These much improved sector results in the second quarter of the year, when the majority of new higher rated contracts began to be recorded in voyage results, is further evidence of a return to profit in the liner industry, the UK's Loadstar reported.

Source : HKSG.