Japanese logistics group NYK has hit problems at its subsidiary Nippon Cargo Airlines, depressing profits in the third quarter and hitting projections for its full year results. It has increased its projected loss for Nippon Cargo to ¥8.8bn ($72m) for the forthcoming half-year. This has been caused by an ageing fleet depressing available capacity and increasing maintenance costs. This situation is requiring NYK to invest in new infrastructure and this will extend the period of depressed profits.

The other main cause of lower income has been a 17% increase in costs, which NYK is blaming on higher shipping fuel prices. Although volumes remain buoyant, container rates are not recovering due to rapid capacity growth in the market.

Revenue for the nine months ending December 31 were up at ¥1602bn from ¥1423bn in the same period a year ago, however Income was down at ¥76,980m, from ¥120,020m.

Bunker rates or fuel are declining whilst container rates are recovering slightly. But for NYK these have not been sufficient to reverse the trend in the figures.

Other sectors however are more optimistic. Bulk shipping continues to perform strongly again income depressed by fuel costs. In contrast the short-term tanker market was stagnant. Car Carriers is also performing well with new capacity being highly utilised in market with continuing high demand.

NYK Logistics provides a mixed picture with the company doing well outside Japan, but lower export growth from Japan and the problems at Nippon Cargo Airlines depressing overall results. In this division revenue was Y351,652m, up from Y315,218m in the same period last year.

The company has revised down its forecasts for full financial year. It now predicts a Net Profit of ¥65 bn ($540m), down 3.7% on the previous expectation.

It is interesting to note that NYK's large and more diversified business is suffering more than its Japanese fellows, K-Lines and MOL, both of whom have just raised profit forecasts slightly. But both of these companies are also suffering from depressed margins on markedly higher volumes.