Japan’s big three shippers see profitable year amid industry recovery

Tuesday, 2 May 2017 00:00 - - {{hitsCtrl.values.hits}}

TOKYO (Reuters): Japan’s big three shippers on Friday forecast a return to profit this fiscal year after last year’s losses, as they emerge from the worst global slump in the container business.

The brighter outlook comes amid a gradual recovery in prices for shipping containers, which carry 90% of the world’s manufactured goods.

“Some improvements in the supply and demand environment on Asia-North America, Asia-Europe and Asia-South America routes facilitated a recovery in the spot freight rates,” Mitsui OSK said in a release.

It cautioned, however, that the container market “continued to be difficult overall.”

Although still below historical highs, freight rates have recovered as consolidation and bankruptcies trim capacity, and growth in global trade boosts shipping demand.

Nippon Yusen KK (NYK), Mitsui OSK Lines Ltd. and Kawasaki Kisen Kaisha Ltd expect a combined operating profit of 57.5 billion yen ($517.32 million) in the year to March 31 compared with a 61.6 billion loss in the business year just ended.

To survive the downturn, the three Japanese shippers in October said they would merge their container units to create the world’s sixth-largest fleet. The joint venture is slated to begin operations in April 2018 with around 250 ships and a capacity of almost 1.38 million 20-foot equivalent units (TEU).

NYK, Japan’s biggest shipping company, said it expected to turn a profit this year due to “higher freight rates in annual contracts and greater cargo volume under the new alliance.”

The company forecast operating profit of 24.5 billion yen this fiscal year following a loss. That is above an average forecast for an 18 billion yen profit from 10 analysts surveyed by Thomson Reuters.

In the three months to March 31, NYK had an operating loss of 2.5 billion yen following a profit of 1.8 billion yen a year ago.

Mitsui OSK expects an annual operating profit of 9 billion yen. In the fourth quarter, it said operating profit was 4.6 billion yen, compared to a 7.3 billion yen loss a year earlier.

Kawasaki Kisen sees a full-year operating profit of 24 billion yen. It posted an 11.4 billion yen loss in the fourth quarter, following a 5.8 billion yen deficit a year ago.