NYK president: Long-term deals, diversity key

NYK president: Long-term deals, diversity key Koji Miyahara, president of NYK Line, said in a New Year's address that 'rock bottom' likely won't hit until 2010, and that the Japanese carrier is preparing for hard times.
   'The financial crisis that began in United States has been expanding into a world economic crisis, and the dominant view now is that the economies of advanced countries like the United States, European Union members, and Japan will mostly experience negative growth in real terms during 2009,' he said. 'Moreover, economic growth will likely slow down in emerging economies such as China and India as well.'
   Miyahara, who is retiring in April to be replaced by Yasumi Kudo, said NYK won't handle the downturn in a 'patchwork' fashion.

Miyahara

   'It is said that the faltering world economy will not hit bottom until the second half of next year, 2010, at the earliest,' Miyahara said. 'In the meantime, demand will continue to shrink, and it will take a year or two more before the world economy recovers cruising speed. So that means we must be prepared for hard times over the upcoming three or four full years, which will be completely different from the last few favorable year.
   'To overcome this impending crisis, on Jan. 1, 2009, I set up an Emergency Structural Reform Project that covers the entire NYK Group. Instead of merely confronting the coming difficulties with patched-up (policies), this project aims to reorganize our business model under new circumstances of our own choosing and prepare for a leap forward to future stages.'
   Miyahara said the carrier's longtime strategy of locking in long-term contracts would serve it well in a down cycle.
   'Our NYK Group has all along pursued a policy of attaching prime importance to medium- and long-term profits grounded in mutual trust with important customers, accruing those profits primarily from long-term contracts rather than from short-term profits from fleet operation in the spot market,' he said. 'Henceforth, we intend to hold fast to this policy, one that gives priority to long-term relationships with customers and applies not only to the bulk-energy transportation division but also to the liner, logistics and other business divisions.'
   He also said NYK would focus on diversifying its business even more than it has so as not to be too vulnerable to swings in liner shipping.
   'For more than 20 years the NYK Group has been devoting its energies to the development of non-shipping divisions,' he said. 'We intend to maintain our stable management by ensuring and fostering diverse operations such as overland transport, air transport and logistics, which promise to become major spheres of business, rather than relying solely on marine transportation, which is likely to be affected by market fluctuation.'