Japan's shipping giants K Line, MOL and NYK have posted record profits after a solid year of rate recovery and sustained volumes, but fear a flatter year ahead because of rising fuel costs and a US economic slowdown.
"A recovery in freight rates for both the container service and dry bulk cargo allowed us to absorb negative factors and achieve our best-ever performance," said NYK Lines managing director Makoto Igarashi, as he announced a 92.6 per cent operating profit increase.
But he only expects a 13 per cent profit increase in 2008. "Higher yen rates and bunker fuel prices served as negative factors for us," he said.
MOL's 2007 profit went up 57.4 per cent, but the company expects only a 5 per cent increase in 2008. "The US is creating anxiety and may affect developing nations, impacting global seaborne trade. High bunker prices, a higher yen and weaker dollar, and various vessel cost increases may compress profits," said a MOL official statement.
"K", which posted a 61 per cent profit, made no predictions, but sounded a note of caution for the coming year, in its official statement: "Under the circumstances where various costs, including fuel costs, railway, truck and feeder charges, terminal-related expenses and environmental protection expenses rise, the company will make all possible efforts to reduce costs and raise freight rates."
NYK, Japan's largest shipping company, net profit soared to JPY114.1 billion (US$1.1 billion) in the year ending March 31 compared with JPN65.0 billion in the previous fiscal year.
Pretax profit jumped 84.6 per cent to JPY198.5 billion, operating profit surged 92.6 per cent to 202.8 billion yen based on a 19.4 per cent revenue increase to JPY2.58 trillion, boosted by strong demand in emerging markets, including China.
Bloomberg also reported that the company expects a pre-tax profit of JPY200 billion (US$1.83 billion) this fiscal year.
Container profits are expected to more than double to JPY20 billion from the JPY9.5 billion earned last year, say analysts as rates increase on North America routes. "The container business looks promising,'' said analyst Yoshihisa Miyamoto at Okasan Securities.
11.5 billion yen, reversing a pretax loss of 9.8 billion yen a year earlier. "Cost cuts and a levy on bunker surcharge also contributed to the turnaround," said Mr Igarashi.
MOL's annual profit went up 57.4 per cent with the year ending March 31 to JPY190.3 billion from JPY120.9 billion the year before. Operating income rose 73.3 per cent to JPN291.3 billion while revenue was up 24.1 per cent to JPY1.95 trillion.
Bulk shipping led earnings with 30.2 per cent higher sales to JPN1.07 trillion, while container revenue was up 20.6 per cent to JPN688.5 billion. Container volume rose 13.3 percent to 3.23 million TEU, representing a utilisation rate of 76 per cent on 4.27 million TEU capacity.
Transpacific, MOL moved 889,000 TEU, up 14.6 percent, rising 13.4 per cent east bound to 558,000 TEU with a 93 per cent utilisation while westbound the company moved 16.5 more boxes at 331,000 TEU with a 57 per cent utilisation.
Asia/Europe MOL liftings were up 8.2 per cent to 696,000 TEUs with Europe-bound trade rising 6.5 per cent to 440,000 TEU with a 95 per cent utilisation rate while on eastbound trade lanes, the company moved 256,000 TEU, up 11.3 per cent on a 59 per cent utilissation.
MOL only expects the coming year's net profit to be of JPY200 billion, based on a revenue of JPY2.05 trillion, an increase of 5.4 per cent.
"K" Line said its profit for fiscal year 2007 rose 61 per cent to JPY83.7 billion (US$803 million) based on $12 billion in revenue, and increase of 23 per cent.
"K" Line will add 180 ships to its 499 vessels. New ships will include 43 containerships, 65 bulkers and 27 car carriers.
There was a 20 per cent increase in cargo movement to Europe. Despite an industry-wide transpacific cargo slowdown, tonnage rose 11 per cent to North America helped by the deployment of 8,000-TEU ships, and separately by two new services to the US east coast.
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