Container losses drag down Japan’s Big 3

   A dour container shipping environment dragged Japan’s Big 3 container lines a collective $570.5 million into the red in the first half of their 2011 fiscal years, according to financial filings by MOL, NYK Line and “K” Line Monday.
   The losses outstripped the three lines’ collective group first half loss – which stood at $480.3 million – highlighting the degree to which container lines have struggled in 2011.
   MOL’s container division lost $143 million in the first half of its 2011 fiscal year (April through September), compared to a $312.1 million operating profit in the same period last year. Its first half containership revenue was $3.7 billion, an 8.4 percent drop from the same period in 2010.
   MOL said its first half capacity utilization on the eastbound transpacific was 87 percent, and 50 percent on the westbound backhaul. On the Asia-Europe westbound headhaul, utilization was 100 percent, while it was 57 percent on the backhaul.
   The MOL Group, which includes a bulk division larger than the containership unit, had total revenue of $8.6 billion in the first half, a 10.7 percent decline from 2010. The operating loss for the group was $120 million, compared to a $1.1 billion operating profit in the first half of 2010.
   NYK’s containership business suffered a first half operating loss of $196.9 million loss, compared to a $321.3 million profit in the first half of 2010. Liner shipping revenue fell 9.7 percent, to $2.8 billion.
   “On North American and European routes, despite the introduction of a peak-season surcharge, freight rates were significantly lower than the same period a year ago due to a deteriorating supply-demand balance, which continued from the previous quarter as new large-sized vessels entered service,” the line said in its financial statement. “On South American routes, the supply-demand balance was favorable and though we succeeded in normalizing freight rates to a degree, rates did not recover to the previous year’s level. Cargo volumes improved along all routes compared to the same period a year ago, particularly on Asian routes because of the recovery from the  effects of the Great East Japan Earthquake, however,  due to lower freight rates and yen appreciation, revenues declined significantly compared to a year ago same quarter.”
   NYK’s logistics unit made $36.4 million in the second quarter, a 21.7 percent increase from the same period in 2010. Logistics revenue was $1.2 billion, a decline of 9.3 percent.
   Total group revenue for NYK was $11.4 billion, down 10.9 percent from the first half of 2010. The group suffered a $120.4 million first half operating loss, compared to a $1.1 billion profit last year.
   “K” Line had first half container shipping revenue of $2.7 billion and an operating loss of $230.6 million. The line didn’t give comparable figures for the first half of 2010 for its container division. The line said its first half volume rose 7 percent, but didn’t specify its first half volume.
   As a group “K” Line’s revenue fell 4.5 percent, to $6.5 billion. Its group operating loss was $239.9 million (meaning the container division loss accounted for nearly all of “K” Line’s losses, despite contributing only 41.5 percent of group revenue). “K” Line had a group profit of $600.4 million in the first half of 2010.