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."
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