NYK targets offshore, LNG to beat shipping oversupply

Speaking at NYK’s 128^th anniversary celebration in Tokyo Kudo said shipping “has a structural problem that makes it prone to oversupply”.

“I believe we must accept that, with the exception of car carriers and certain special vessel types, oversupply is the usual state of affairs for the majority of vessel types,” Kudo said. “There is a time lag of roughly two years from the time an order is placed to the completion of a newly built vessel. Therefore, if cargo movements suddenly worsen, the supply and demand gap expands sharply.”

Even if the rate of cargo growth simply slows the supply – demand gap will increase for two years as newbuilding plans were made on the basis previous cargo growth rates.

With this scenario in mind NYK has expanding its business in “more than shipping”.

“We are actively expanding the offshore business, including drill ships, shuttle tankers, floating production storage and offloading (FPSO) units, and floating storage and offloading (FSO) units,” he said.

Kudo noted these were challenging fields to enter that also largely involved long-term contracts.

“We are also expanding in the LNG business,” he added, saying that as with offshore it was a business that concerned more than just ships.

Looking to the car carrier business NYK sees it as one where the demand and supply gap does not arise as when cargo movements decline recovery takes a long time so older vessels are scrapped maintaining the demand and supply balance.

However, in the case of Japan the strong Japanese Yen has driven automobiles to be produced in local markets rather than exported from Japan and as a result it does not expect to see a major expansion in volumes.

“As a way out of that, we are expanding the on-land side of the business through terminals for finished automobiles, inland transportation, and so on, which are also within the scope of more than shipping,” Kudo said.

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