Japan's maritime shippers sailing toward heftier profits
TOKYO -- Japan's three major maritime shipping companies have set a course for marked earnings improvement in fiscal 2014, propelled by economic recovery in emerging markets.
Nippon Yusen KK sees group pretax profit jumping 20% to 70 billion yen ($675 million) for the year through March 2015. Mitsui O.S.K. Lines Ltd. expects profit to surge 27% to 70 billion yen, while Kawasaki Kisen Ltd. anticipates a 5% gain to 34 billion yen.
The companies' containerships are carrying more goods, including everything from everyday products to furniture, on their chief routes from Asia to North America and Europe.
Nippon Yusen expects transport volume for its Asia-North America routes to edge up 5%, likely pushing the containership business into the black for the first time in four years. The company will also be aided by the introduction of large vessels boasting high transport and fuel efficiency.
Marine transporters are seeing steady demand for vessels hauling bulk freight and automobiles, and other ships without fixed schedules. There was an uptick for such freight as iron ore and coal last fiscal year for China-related shipping, says Kawasaki Kisen Director Yukio Toriyama, adding that the company "isn't pessimistic" on this fiscal year's prospects either.
The supply of ships is tightening owing to a letup in the number of newly completed vessels. Moreover, companies are raising rates for bulk freighters and significantly reducing fuel costs by slowing ships down.
At the same time, shippers will feel the impact of the Japanese carmakers' moves to expand production overseas. With the exception of Mitsui O.S.K., they are expected to see vehicle shipping volumes remain fairly flat. They will hasten to build up business abroad, including outbound traffic from Southeast Asia, as demand dwindles for relatively profitable shipping out of Japan.
In light of the positive trends, Moody's Japan on Wednesday announced that it has upgraded the maritime shipping industry's ratings outlook to stable. It had been negative since June 2011. The ratings agency sees less of a risk that the gap between shipping capacity and actual demand will deteriorate.