Japanese shipping trio diverge on prospects

The big three Japanese shipping and logistics companies have an unusual level of divergence in their New Year messages, with Mitsui OSK Lines striking a more optimistic note for the future of the shipping sector than either NYK or K-Line
Koichi Muto, President of Mitsui OSK contrasted the pessimism seen in the middle of 2010 with the results achieved by the beginning of this year. Due in great part to the effectiveness of the company's cost control measures he said that Mitsui OSK now projected, "...consolidated ordinary income for fiscal 2010, the first year of the plan, to be much higher than the planned target of ¥100bn". This performance was driven by the container shipping business of Mitsui OSK despite an environment of increasing costs.
In contrast, NYK's President, Yasumi Kudo, predicted a gloomier future. Seeing growth rates of 5% for the routes from Asia Pacific to western markets and the "two-digit" growth of intra-Asian markets, NYK predicted a global growth rate of 7-8% in 2011 and 2012. However, the company also predicted an annual growth in container capacity for the same two years to be roughly 10%, as a result of the completion of numerous outstanding orders for new containerships. As a consequence of this excess of supply over demand, profits in the second half of the Financial Year 2010 will fall to around half of those seen in the first half. This is despite strength in other areas of NYK's business such as car carriers and freight forwarding.
The perspective from 'K' Lines was similar to that of NYK. Kenichi Kuroya, 'K' Lines' CEO, admitted that the recovery from the depth of the recession had been impressive and that much of the laid-up shipping tonnage had been put back into circulation. Yet in terms of the company's immediate prospects he observed that, "At the time of announcement of financial results for the 2nd quarter, our projections for the entire year were operating revenues of ¥985bn, ordinary income of ¥55bn, and net income of ¥32bn, but our projection for ordinary income in the second half is ¥12.2bn, nearly the same as the ¥12bn predicted at the time of announcement of financial results for the 1st quarter. This indicates that the business environment is not at all optimistic."
In part the difference is one of tone. Mitsui OSK is looking at its recent record as an inspiration to performance where as 'K' Lines and NYK are looking at market fundamentals. None-the-less, the underlying lack of confidence is notable, not least as all three companies have considerable resources both in shipping and other areas of logistics.
Source: Transport Intelligence