"Ichiyo-KENfuku," says MOL president Ashida, which means: "Do not wait passively for favourable turn of situations, but rather be proactive to seize better opportunities through our own endeavours."
Prior to the global financial crisis that began in 2008, MOL enjoyed big profits by riding the crest of a wave in an extremely favourable market.
Company president Ashida says that the radically altered situation of today means the company must push hard, taking the initiative and using the recession as an opportunity to build up its strength.
MOL's financial results returned to the black in the third quarter of 2009, after hitting a low of ¥14.8 billion ordinary loss in the first quarter.
While its current forecast for FY 2009 ending March 2010 is ¥10 billion in ordinary income, such profit level is lower than it should be, and the industry could well see even more turbulence.
The company has already taken a number of steps to improve profitability.
Despite its original plan to increase its fleet by 140 ships during the eighteen months after the financial crisis set in, the company embarked on a mission that involved the scrapping of vessels and redelivery of chartered tonnage, and actually cut its fleet by about 150 vessels to less than 900 vessels.
However, with MOL once again focusing on growth, about 150 new-building vessels will be delivered over the next three years.
The company also trimmed its organisational structure in response to declining worldwide container trade volumes, resulting in cost savings of about ¥46 billion.
While the measures already taken will continue to significantly reduce losses in the containership business, the difficult business environment of this sector is forecast to continue for another three or four years.
Still, president Ashida points out that there are many opportunities for growth.
Although Japan's economy has become stagnant in the face of deflation, the US and Europe are already heading towards a recovery, and the continued strong growth of developing countries such as China, India and Brazil will almost certainly see further expansion of seaborne trade volumes.
While a number of obstacles remain for ocean shipping, such as overcapacity and the need to reduce greenhouse gas emissions, the industry is inherently a growing one.
MOL has pushed forward with the development of a series of next-generation vessels to reduce its environmental impact, announcing the concepts of ISHIN-I (car carrier) and ISHIN-II (car ferry) that aim to reduce CO2 emissions by 50%.
MOL restructured its ferry business in Japan last year, making Kansai Kisen Kaisha a wholly owned subsidiary. In addition, Nissan Motor Car Carrier Co became a subsidiary, strengthening the group's car carrier business.
MOL will begin a new mid-term management plan in April, and, despite what appears to be a dire situation facing the containership business, president Ashida is confident that the group will overcome whatever hurdles the industry throws at it and forge ahead to a better future.
Source : EFT, 06.01.10.
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