[101012.EN.SEA] Antitrust Probe, Excess Tonnage, Trouble With China Mar NYK Birthday

JAPANESE transport giant NYK has had its 127th anniversary birthday marred by investigations of alleged anti-trust violations, overcapacity in the market and trouble with China over disputed islands, which has hit company business on the mainland hard.

"We are cooperating fully with the investigations," said NYK president Yasumi Kudo, who expressed "deep regret" for alleged antitrust violations that have resulted in being investigated by Japanese and US authorities.

Discussing the current excessive oversupply of container capacity, Mr Kudo said the group's vessels lacks long-term contracts in the dry bulk carrier division and crude oil tanker division has recorded the poorest bottom line ever.

But LNG transport is up because of profitable long-term contracts. Profits have also been recovered in the car-carrier division, following disruption after the Great East Japan Earthquake and Thai floods.

"However, it is perhaps the containership business that has had the biggest impact on the recent recovery in profitability. Despite the fact that the gap between supply and demand has persisted and been not too dissimilar to the bulk carrier and tanker sectors, some significant recovery of ground has been made, with freight rates moving towards a position where revenues and expenditures are at an even level," said Mr Kudo in an address to staff at the anniversary celebration ceremony.

Despite a large gap between supply and demand, Mr Kudo said the bottom line is beginning to improve in the box business, but warned that "the rush of completed container vessels, substantially exceeding cargo demand, is set to continue until 2014, which makes future market predictions very difficult".

Therefore, NYK would stick to its current policy called "More Than Shipping' that involved "migrating to a light-asset business model within our containership division, expanding logistics activities, including our non-vessel operating common carriers (NVOCCs) business. We have to expand our business in the strong emerging countries, especially in the Asian market, with which the group is familiar".

"The business environment is expected to remain harsh within air cargo transportation over the near term, as it is highly susceptible to market conditions in the US and Europe," he said.

A further area of concern is the ongoing dispute over the Diaoyu Islands in the region. "The latest increases in tension between Japan and China may adversely affect our expanding Chinese business activity. I am concerned about this, the NYK president added.

Source : HKSG.