Lack of Committed Charters Cause of MOL's Losses

Press Release
Monday, January 07, 2013

In his New Year message, Mitsui O.S.K. Lines President Muto predicts loss in 2013 of same magnitude as last year, suggests new business model.

Excerpts from Mr. Muto's message follow:

"The marine transport industry has faced a challenging external environment mainly due to economic slowdowns in Europe, the U.S. and China, the yen's appreciation, and high bunker fuel prices. This has certainly been a factor behind MOL's losses. However, we must also take a hard look at reality and ask ourselves why MOL has fallen into this predicament.

The biggest reason is that MOL's free tonnages, namely tonnages with no committed contracts, have been operating at a large loss as a result of an unprecedented decline in dry bulker and tanker freight rates. While dry bulkers' deliveries in 2012 surpassed the record-high level of the previous year, the seaborne trade volume of resources and energy grew at a slower pace due to slowing Chinese economic growth. This has widened the supply-demand gap for vessels, causing freight rates to remain at historically low levels over an extended period. Consequently, MOL's free tonnages, which had generated large earnings when freight rates were buoyant, recorded losses that have significantly eroded the stable earnings accumulated through steady sales efforts in the past. As a result, the company as a whole fell into the red.

Starting from around the second half of 2013, we are projecting firm seaborne trade volume centered on emerging countries, while the supply of new vessels is expected to decline. We believe that freight rates will start to recover in step with an improving supply-demand gap for vessels. However, Chinese shipyards and other players have significantly expanded their scale of operation in recent years. If they continue to build new vessels at a rapid pace going forward to keep running their business, this shipbuilding could weigh heavily on the recovery of freight rates. To ensure that we restore profitability based on a stressed scenario where the business environment remains extremely challenging in 2013, we must shift to a business structure that is not reliant on a recovery in freight rates.

Future Measures


First we must reduce the market exposure of free tonnages, which is the driving factor behind our losses. Generally speaking, market downturns are a time for procuring competitive free tonnages. However, to reduce the risk of a decline in earnings due to market swings at the present time, we must work to reduce our market exposure by winning as much cargo as possible, while gauging the right timing.

Furthermore, we must enhance MOL's resilience to market fluctuations by reducing its exposure to the risk of changes in market conditions. To this end, we must do everything we can to reduce the number of free tonnages in cooperation with our business partners. Measures will include the scrapping, sale, and redelivery of vessels as well as delaying delivery of new vessels."

Mr. Muto concluded in some detail, with an explanation of these, and other measures to be taken by the company in order to return it to profitability.
 

 

Maritime Reporter March 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Contracts

Yachting Malta PPP Sets Sail

Yatching Malta Ltd (YML) - a new public private partnership (PPP) between the government and the Royal Malta Yacht Club (RMYC) was formed with the aim of putting Malta on "the global yachting map".

Carnival to Add Nine Ships to Cruise Fleet

Carnival Corporation enters into strategic partnerships to add nine cruise ships to its fleet over a four-year period starting in 2019; shipbuilders Fincantieri

'Run to Remember' by USCG Foundation

The Coast Guard Foundation, a non-profit organization committed to the education and welfare of Coast Guard members and their families, announced this year’s

Tanker Trends

Helios LPG Pool to Start Operating

Dorian LPG Ltd. today announced the commencement of operations of Helios LPG Pool LLC on April 1st, 2015.  Helios LPG is jointly run by Dorian LPG and Phoenix Tankers Pte.

Stolt-Nielsen Completes Bond Issues

Stolt-Nielsen Limited announced the placement of senior unsecured bonds in a total amount of NOK 1,100 million in a new five-year bond issue carrying a coupon of 3M NIBOR plus 4.

Icebreaker Murmansk Launched at Arctech Helsinki Shipyard

The 16 MW Icebreaker for the Russian Ministry of Transport was launched at Arctech Helsinki Shipyard on March 25th, 2015. Before floating the vessel, she was

Bulk Carrier Trends

Cosco Bulk Shipping Losses Down in 2014

China Cosco said losses in its main dry bulk shipping business fell sharply in 2014 and its container shipping gross profit grew amid a still subdued global shipping market.

MOL’s Coal Carrier for Tokyo Electric Power

Mitsui O.S.K. Lines, Ltd. today announced that the coal carrier Hakutaka, which will serve Tokyo Electric Power Company, Inc. was delivered at Mizushima Shipyard

Golden Ocean and Knightsbridge Complete Merger

The merger between Knightsbridge Shipping Limited and Golden Ocean Group Limited was approved today at special meetings of both companies' shareholders.      The new company,

Finance

Cosco Bulk Shipping Losses Down in 2014

China Cosco said losses in its main dry bulk shipping business fell sharply in 2014 and its container shipping gross profit grew amid a still subdued global shipping market.

Steady Growth Reported by the Swedish Club

The Swedish Club reported a solid operating result to its board today, continuing a record of building on steady growth. 2014 was seen as a stable year, where

Qatar Hikes Container Storage & Clearance Charges

Changes to sea port charges have been implemented in Qatar, as per the decision of the country's Council of Ministers.   20' containers (clear in approx. 3–7 days,

 
 
Maritime Contracts Naval Architecture Navigation Pipelines Pod Propulsion Port Authority Salvage Ship Electronics Sonar Winch
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.3580 sec (3 req/sec)