Ahead of a merger of the container lines businesses of Japan’s “big three” NYK, K Line and MOL, the latter reported a JPY21.3bn ($203m) loss for its container shipping business in the first half ended 30 September compared to JPY9.1bn loss a year earlier. MOL saw its revenues from container shipping slump 25% year-on-year to JPY292.6bn.
MOL said that one-year contract rates there was a “considerable decline” in rate levels especially on the transpacific, while the positive impact on rates from the bankruptcy of Hanjin Shipping only a “slight” impact on its results.
“Under this business environment the ordinary loss in the containerships segment deepened year on year despite efforts not only to reduce vessel costs through the business structural reforms, and improve capacity utilization rates through stronger sales capabilities, but also to cut operation costs by reducing the expenses of positioning empty containers through improved yield management,” MOL said.
Meanwhile K Line reported JPY21bn loss on its container shipping operations in the first half compared to JPY3.1bn. Revenues saw a 26.9% fall year-on-year JPY246.9bn for the first half the final year ended 31 March 2017.
“With the continued completions of ultra large container vessels, the global balance of the tonnage supply and demand has deteriorated, and the freight-rate market has declined year on year and underperformed initial expectations,” K Line said.
MOL, K Line and NYK announced on Monday that they would be establishing joint venture on 1 July 2017 to merge their container line businesses.