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MOL cuts bulkers and tankers, expands in Singapore

MOL cuts bulkers and tankers, expands in Singapore
Tokyo: One of the world's largest shipowners Mitsui OSK Lines (MOL) plans to cut 50 dry bulkers and 20 tankers from its 250 strong fleet by 30 March 2014.

The announcement came on the back of disappointing Q3 results and a forecast of increased losses for the 2012 financial year. In his president's message last week, MOL president Koicho Muto wrote "To reduce this deficit, we will promote sales, scrapping, returning of ships, and cancelling of charter contracts to scale down the free tonnages and return to proper market exposure [in the dry bulker and tanker sectors]… We have already sold and scrapped 15 dry bulkers and four tankers by the third quarter in this fiscal year, and we plan to sell and/or scrap additional five crude oil tankers during the fourth quarter."

The returning of ships and scrapping of charter contracts is bad news for tanker and dry bulk owners in an already tough market.

The president's message opened on a more positive note, with MOL looking to expand its operations in Singapore, where it enjoys considerable tax incentives as compared to its home base.  "We have developed business in Singapore, mainly with tankers, but we are now moving to transfer sales activities, chartering and operation of dry bulker free tonnage to Singapore as well. Specifically, during the fourth quarter of this fiscal year, we will reinforce local subsidiaries by selling vessels and assigning charter contracts of about 130 dry bulkers to them," Muto said. 

The announcement did not affect the company's share price, as the Japan listed stock continued on its upward trend since Novemeber 2012.

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