Japan’s shipping majors ride container wave as tankers and bulkers hit headwinds
NYK, MOL and K Line all saw their quarterly profits multiply
Container liner ONE, jointly owned by the three companies, was the largest contributor to profits. However, growth was partially limited by softened dry bulker and tanker markets
BOLSTERED by robust container shipping markets, Japan’s three major shipping groups posted stellar results in the second quarter of their fiscal year.
NYK Line, the largest of the trio by revenue, booked ¥155.6bn ($1bn) in net profit for June-September, nearly quadrupling levels seen a year ago.
K Line saw its net profit soar about 4.5 times to ¥110.6bn, while the earliest reporter Mitsui OSK Lines more than doubled its surplus to ¥145bn.
The three firms hold 38%, 31% and 31% stakes respectively in Ocean Network Express. The Singapore-based container carrier, the sixth largest in the world. earned nearly $2bn in the quarter, buoyed by the Red Sea rerouting.
In contrast, other segments at the diversified groups fared relatively weakly.
NYK’s air cargo and automotive businesses increased profits during the three-month period but at a much smaller margin.
Its dry bulk and energy shipping divisions saw lower quarterly earnings, prompting full-year forecast downgrades.
“In light of the decrease in demand in China and other factors, the [VLCC] market levels in the second half are expected to be lower than our previous forecast,” said NYK.
That said, its gas shipping business is expected to remain stable, backed by mid- to long-term contracts, while air cargo and logistics provide some optimism.
The reports from MOL and K Line reflected similar mixed pictures.
MOL said that the market for crude oil and product tankers is expected to remain firm, driven by geopolitics and stable profits from long-term contracts.
“However, the forecast has been revised downward to reflect a temporary market decline due to ongoing production cuts by Opec+ and a drop in domestic demand in China.”
K Line expressed cautious optimism about the outlook for the dry bulk market.
“Although there are concerns such as the uncertain outlook for the Chinese economy and geopolitical risks in the Middle East, market conditions are expected to stay firm in the medium to long term, supported by a tighter supply-demand balance due to the limited delivery of new vessels.”
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