Fuel tops Miyahara’s list of NYK’s “problems”

Fuel tops Miyahara’s list of NYK’s “problems”

Fuel tops Miyahara’s list of NYK’s “problems”

   Koji Miyahara, president of Japan’s NYK Group, said Friday he expects the company to achieve record revenue and profits for the 2007 fiscal year ending March 31, but warned against complacency in an environment of soaring fuel expenses.

Miyahara

   The NYK boss pointed to upcoming elections in the United States, Russia and Taiwan as major political events that could affect the global economy, along with the fallout from the U.S. sub-prime mortgage crisis, but said it is the record price of bunker fuel that is the greatest threat to future profitability.
   “As for the 2008 fiscal year starting in April, the global demand for transport will continue to be robust against the background of a smoothly growing world economy, especially as it involves BRICs (Brazil, Russia, India and China). Nevertheless, we cannot afford to be overly happy with the booming market for marine transport,” Miyahara said in his New Year’s speech.
   Miyahara estimated that NYK’s fiscal year 2007 fuel expenses would increase about 80 billion yen over the previous fiscal year with bunker oil in Japan and Singapore nearing $500 per ton, compared to $163 per ton in fiscal year 2003.
   “I would particularly like to reemphasize that the systems so far maintained no longer suffice to enable containerships consuming massive quantities of fuel to continue operating at a profit. If a single containership daily consumes 200 tons of fuel costing $500 per ton, its fuel cost will reach as high as $100,000 in just a day. This means that a drastic change is occurring in the traditional business model of marine transport,” Miyahara said.
   NYK’s “Save Bunker Plus” campaign involved reconfiguring its service network in order to slow ships, and Miyahara said a 10 percent slowdown in voyage speed results in more than a 25 percent saving in fuel consumption. He joked that the situation is so bad that employees have even been asked to wring cleaning cloths dry to extract drops of oil.
   Miyahara also listed environmental protection as another “problem” that NYK must address in the year ahead. “The NYK Group needs to squarely face up to the environmental problem without lagging behind,” he said.
   NYK will reveal its new medium-term management plan at the end of March.