Line weighs up options to boost profitability of container business
Reports in the international
press have suggested that
Mitsui OSK Lines, one
of Japan’s three largest
shipping firms, could
consider withdrawing
from the Asia to east coast
of South
America trade
via SA on the
eastbound
leg.
The Nikkei
business
daily quoted
Junichiro
Ikeda, MOL’s
president
and CEO, as
saying his
company
would take
a “drastic
measure” on
that shipping route
This as he said that
MOL would “push ahead
with structural reforms”
to boost the profitability
of its container shipping
business. As part of this,
the company views the
possible exit from the major
trade as key to nursing its
ailing container shipping
business back to health
amid sluggish market
conditions.
Also, quoted by the
Journal of Commerce
(JOC), Ikeda said: “It is a
shipping route with a long
history. But it generates
the secondbiggest
loss
after the
Asia-Europe
route despite
accounting
for only
around 5%
of overall
sales in our
company’s
container
shipping
business.
Withdrawing
is also
one of our
company’s options.”
That, as the Tokyobased
company’s container
shipping business
continued to bleed red
ink in the first half of
fiscal 2015, which started
in April, despite slight
revenue growth.
Responding to the news
reports, Iain McIntosh, SA
regional sales manager,
MOL said: “Possibly you
should look at that last
sentence where he says ‘one
option’.
“If you close that route
down, you lose all of Brazil
and Argentina. And we’re
a pretty big player in
the field. So that would
definitely be a pretty
‘drastic measure’. I think,
rather, that our CEO is
passing on a message to
the lines in general on that
trade – that it’s severely
overcapacity.”
The story behind this,
said McIntosh, was
an absolute boom in
westbound trade between
Asia and the East Coast
of South America (ECSA)
from 2008. According
to Dataliner the figure
jumped up from 818 464
TEUs that year to break the
million barrier in 2011 –
peaking at 1 394 765 TEUs
in 2013.
It took a small 1.6% drop
to 1 372 641 last year, but is
sitting at 1 004 632 for the
first nine months of 2015.
But, McIntosh told
FTW, the lines on the trade
(and there were 14 in six
consortia at the peak) still
have a trade capacity –
even with removal of the
NYK/KL/PIL service in
the third quarter – of over
1.85 million TEUs deployed
westbound, according
to Drewry Maritime.
“So that,” he added, “is a
demand of about 26 000
TEUs a week compared to
a capacity deployed of near
35 600. Roughly just over
70% utilisation (at best).”
INSERT & CAPTION
I think that our CEO is
passing on a message
to the lines in general
on that trade —
that it’s severely
overcapacity.
– Iain McIntosh
CAPTION
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