MOL Taking Steps to Reform Its Containership Business

The containership division of the Japanese shipping giant Mitsui O.S.K. Lines (MOL) is experiencing a significant deficit for this fiscal term, MOL President Koichi Muto said in 2015 New Year Message.

The dip has been attributed to lower freight rates on Asia-South America East Coast routes, along with delays in the work to fully automate the company’s U.S. terminal.

“And the fact is, in terms of competitiveness and earnings strength within the industry, we are somewhat behind. As far as the structural problem our containership division faced, we have already taken steps to reform the business, such as upgrading the fleet with the world’s largest containership – 20,000TEU – to make us more cost competitive.

“With global economic expansion, containerized cargo trade is certain to keep growing so the containership business, including container terminals, represents a growth opportunity,” Muto explained.

With respect to the dry bulker division, a decrease in deliveries of newbuilding vessels, especially of Capesize bulkers, has tightened up the supply and demand balance, and the market itself should see a strong recovery, but for nearly a year, it has remained sluggish overall, MOL’s President went on to say.

Muto sees the company’s growth opportunity in diversification.

“Every type of vessel should not depend on a market recovery; instead, we must reconstruct business so we can post higher profits without depending on market conditions, and that’s what we are aiming for. In reality, by offering our customers added value through services that meet their needs and take advantage of our strengths, we have gained many long-term contracts that will ensure stable profits in the future,” he added.

In that respect, the company’s LNG carrier and offshore business divisions signed long-term contracts for more than 10 vessels for shale gas transport to Japan and overseas projects last year.

This was done through MOL’s participation in Yamal LNG project in Russia and effort to operate ice class LNG carriers for the Northern Sea route.

Further, the tanker division grasped the changes in cargo movement and moved into the shuttle tanker business, where demand is increasing as the offshore business grows.

“We expect these new projects and businesses to generate highly stable profits and contribute to expanding our business domain. By moving aggressively into such growth areas, we will further expand the base of our businesses that bring us stable income and profit,” Muto said.