NYK liner trade slides 250pc to post annual loss of US$571 million

JAPAN's second biggest container line, NYK, has posted an annual loss of JPY44.7 billion (US$571 million)in the liner trade business, down 250 per cent against last year's profit of JPY30.2 billion for the fiscal year 2011, ending on March 31, 2012.

NYK, the world's 13th largest container carrier, attributed the loss to high bunker prices and a decline of freight rates for its core trade lanes, saying overcapacity was to blame.

Overall group revenues declined 6.7 per cent to JPY 1.80 trillion. Revenue for the liner business was JPY418.7 billion, resulting in an operating loss of JPY43 billion.

The poor performance in liner trade business was the main cause of NYK's deficit for fiscal 2011. The company said in its annual report that the supply-demand balance had deteriorated with the completion of numerous large containerships, mainly on European routes, which resulted in plummeting rates.

Sluggish cargo movements were also experienced, which were worsened by the "Great East Japan Earthquake and flooding in Thailand."

The company said it had taken actions to tackle the problems. One of the main cost reduction measures was the practice of slow steaming to reduce bunker oil consumption, resulting in cost savings of JPY30 billion.

This saving, said NYK, combined with reductions in selling, general and administrative expenses and variables expenses in the liner trade business, contributed to a total cost reduction of JPY34.5 billion.

However, its "measures were unable to fully absorb a larger-than-expected downturn in market prices," said NYK.

For fiscal 2012 ending March 31, 2013, NYK chief financial officer Kenji Mizushima said: "We plan to achieve profitability through further cost reductions and contributions to business results from businesses with stable freight rates, which we are focusing on expanding under the medium-term management plan."

NYK suffers US$150 million first half LOSS, expects losses to widen

NYK LINE, Japan's second largest container carrier, has followed MOL and "K" Line in posting half year losses - in its case, a US$150.3 million loss with an estimate of full-year decline of $225 million.

From April to September, NYK’s revenues shrank 9.8 per cent to $11.35 billion while costs rose 0.4 per cent. Operating losses totalled $120.4 million against an operating profit of $961 million in the same period last year.

The carrier's container business posted a loss of $86 million, compared with an operating profit of $213 million a year earlier. Liner revenue was down 12.1 per cent to $1.4 billion.

North American and European trades suffered from declining rates due to overcapacity, said NYK. South American trades had a good supply-demand balance in the past six months, but rates were weak.

For the full fiscal year ending March 30, 2012, NYK lowered its group-wide revenue forecast 5.5 per cent to $22.7 billion, expecting an operating loss of $131 million and a $280 million loss on recurring operations.

The world's 11th biggest carriers said running in the red was due to strong yen and weak global economy with "tepid" container volume, overcapacity and falling rates. The operating environment has been very harsh over the past six months and is expected to be difficult next year.

NYK projects the yen will stay strong against the dollar and the bunker prices will remain high. A strong yen impairs the performance of Japanese carriers because revenues are mainly in US dollars while most of their expenses are in yen.

Also, the recent flooding in Thailand will have negative impact on its car carrier volumes, said NYK, but its dry bulk section is promising, while the tanker division is suffering from a supply-demand imbalance due to the deployment of new vessels.

picture: google.com / source: shippinggazette

Big three JAPAN lines in the RED in first quarter

Japan's major shipping lines - MOL, NYK and "K'' Line - posted net losses in their fiscal year first quarter compared with net profits a year earlier, due to higher fuel cost, lower freight rates and yen appreciation.

"Freight market remained sluggish, and the yen appreciated. Because our income is based on the US dollar, yen appreciation means less revenue. Besides, fuel costs rose in the period," said an official at MOL, reported Platts Commodity News.

MOL said its bunker fuel costs for the period April-June period averaged at US$625/mt, up 31.9 percent from a year earlier. Yen averaged at 81.80 versus the US dollar, compared with 91.44 in the same period last year, said the company.

MOL reported a net loss of $103.72 million for April-June compared with a net profit of $263.85 million a year earlier. Its revenue was $4.42 billion in the period, down 12.1 percent year-on-year.

NYK Line reported a net loss of $90.62 million for April-June, compared with a net profit of $291.38 million in the previous year. NYK Line's revenue fell to $5.68 billion, down 11.3 percent year-on-year.

"K'' Line reported a net loss of $47.23 million over April-June, compared with a net profit of $200.25 million a year earlier. "K'' Line's revenue was $3.09 billion in the period, down 3.8 percent from a year earlier.

picture: google.com

NYK has established NYK Automotive Logistics (China)

NYK has established NYK Automotive Logistics (China), (NALC; head office: Tianjin, China), a wholly owned subsidiary, to further strengthen the NYK Group's finished-car logistics business in China, where the automobile market has rapidly grown to become the world's largest.

The NYK Group began its finished-car logistics business in China in 2003 and has since developed diverse finished-car logistics services ranging from finished-car land-transport services throughout the country and car-carrier terminal operations at the four major ports of Dalian, Tianjin, Shanghai, and Guangzhou to value-added services such as PDIs (Pre-Delivery Inspections) at VDCs (Vehicle Distribution Centers).

By the establishment of NALC, the NYK Group will be able to centralize customer service desks and maximize the utilization of the existing service network for the distribution of finished cars throughout China with the aim of providing effective solutions to meet customer needs.

The NYK Group began the land transport of finished cars in 2005, and grew it as a part of NYK Logistics (China) (NLC), a wholly owned subsidiary in China. In 2010, the NYK Group was operating about 700 car trailers to provide land-transport services throughout the country and delivered around 850,000 finished-cars from ports and plants to dealer outlets.

As well as taking over the land transport of finished cars from NLC, NALC will respond to the further developing Chinese automobile market comprehensively. Furthermore, the NYK Group will reflect customer needs for logistics in the operations of terminals, land transportation, VDCs, and PDIs to further accelerate an improvement in quality and the enhancement of competitiveness.

The logistics services other than the land transport of finished-cars, such as the automobile-parts logistics business in China that originally was provided by NLC, will continue to be provided by NLC. NALC and NLC will cooperate with each other to improve the NYK Group's automobile-related logistics services in China.

In 2010, sales of new cars in China exceeded 18 million units. Within several years, sales are forecasted to exceed 20 million units. As imports, exports, and the need for inland transportation increase, the need for car logistics is expected to further expand. The NYK Group will continue to make efforts to utilize its accumulated expertise with respect to finished-car transportation and high-quality services to respond to the diverse needs of the company's customer needs.

source:logasiamag.com / picture: google.com