Japan Shipping Trio Comes Back With Strong First-Half Profit
Date: Monday, November 4, 2019
Source: Wall Street Journal
Japan’s top three shipowners posted strong profits in the first half of 2019 as the merger of the container shipping operations began delivering after a year of deep losses.
Mitsui O.S.K. Lines Ltd. , Kawasaki Kisen Kaisha Ltd. (K Line) and Nippon Yusen Kabushiki Kaisha (NYK) launched Ocean Network Express Pte. Ltd. in April 2018 that became the world’s sixth biggest container operator.
ONE swung to a profit of $126 million in the six months ending Sept. 30 from a loss of $311 million in the same period a year ago. MOL, NYK and K Line all came back to the black from losses last year. The combined business said it expects a full-year profit of around $60 million because of the impact of slowing trade.
Container ships move the vast majority of manufactured goods like cars, clothing, furniture, appliances and food. Carriers in the sector have been struggling with excess capacity in a period of dimming global trade, however, and the Japanese carriers merged their container operations amid broader consolidation in the industry aimed at cutting costs.
“Freight rates of Asia-North America trade have improved; on the other hand, Asia-Europe trade was sluggish as there was no peak season rate hike due to deteriorated supply-demand balance,” ONE said in a statement. The shipping company said it is “targeting further improvement in our competitiveness by continuing cargo portfolio optimization plus cost saving initiatives.”
Several shipping lines have reported relatively upbeat results in recent weeks despite what they say is an uncertain trade environment. Hong Kong-based Orient Overseas Container Line last week said its revenue expanded 5.8% in the third quarter, including a 7.1% increase in the trans-Pacific business, which makes up the biggest share of its operations.