MOL confident that recession is on its way out

As the world claws its way out of the worst recession in 50 years and encouraging signs emerge of slow but sure economic recovery, shipping lines continue to hurt on all trades – and the pain is clearly not over. The past year has been underscored by numerous rate increases of one kind or another to keep the lines afloat. Mitsui OSK Lines (MOL), a dominant player on the Europe/West Africa/Far East and East Coast South America trades to and from South Africa, is no different from its many competitors – it’s really all about survival. The Japanese shipping giant, the world’s largest in terms of global fleet of all ship types, has already deemed it necessary to impose three increases relating to emergency bunker and heavy cargo surcharges as well as a general rates restoration (GRR) on Asia/South Africa cargo between August 12 and September 1 and a further GRR of US$200teu on the same trade from October 1. Increases have also been imposed on the strong South Africa-Asia leg over the past three months. That is not where it ends, however, so shippers be forewarned. In conversation with FTW last month, ironically the first anniversary of the collapse of Wall Street’s Lehmann Brothers, Hirohiko Okada, director for MOL South Africa and responsible for trades into and out of Southern Africa, makes clear further rate restoration is a certainty. “The rate level has declined rapidly, by more than half since 2008, and without seeking further increases we cannot survive or serve the customer,” he says simply. Many carriers have removed a lot of capacity in South Africa and also most global trades as unsustainable freight levels and lower cargo flows have made this a necessity for survival. Of concern, too, is the price of oil, presently hovering upwards of US$70 a barrel, which may well give rise to further MOL bunker increases. Quizzed on the outlook for the year ahead, Okada believes the global recession is on its way out. “We are at the turning point and foresee volumes picking up between South and West Africa and Asia. “Our ships are almost full, exports from South Africa to China having improved dramatically in recent months. Imports from Asia are less strong but continue to improve and NPA statistics for August showed a welcome national 12% increase in import flows month on month.” While MOL’s Asia/South Africa/ West Africa business remains key, the ongoing aim is to introduce further services between South/West Africa and Indian Ocean Islands to Asia. MOL’s current fiscal year ends March 31, 2010, and Okada is hopeful this will signal the beginning of better things to come. “This has been a difficult year for MOL but it’s time for an improvement and we expect to recover from next year onwards.” Youthful-looking Okada – he’s actually 42 with a son of 15 – is a graduate in international law and joined MOL 18 years ago. He has worked in many different devisions since then, including car carriers, business process systems, financial and accounting and trade management, his current portfolio.