?K? Line scales to meet demand

ôKö Line scales to meet demand    The chief executive officer of Japan’s 'K' Line said his company is restructuring, reducing capital spending, returning some ships on charter and demolishing others because of the economic downturn.
   “In view of the adverse circumstances and in the absence of a clear road map for overcoming this unprecedented global economic crisis, it is necessary to be realistic and pragmatic,” said Hiroyuki Maekawa, president and CEO. “We should not expect much improvement in the business environment for the next several years, and as such, it is imperative that we concentrate our efforts on paving our own new way for the future of the company.”
   In his New Year’s message to employees, Maekawa said, “In the short term, we have held back on capital investment plans in order to focus on the immediate restructuring of the containership sector, which has suffered the greatest damage, by scaling down and reorganizing freight services to North America and Europe in accordance with the decline in demand. Our fleet has been reduced by selling, demolishing or returning up to 30 vessels for a swift streamlining of our shipping operation.

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   “Additionally, for the purpose of improving cash flow, orders that had been placed for the construction of new vessels have been postponed or changed to other vessel types, and early termination of chartered vessels has been implemented as well. To achieve this restructuring it has been decided to allocate around 50 billion yen,” he added.
   The information service Alphaliner ranks 'K' Line as the world's 13th-largest container shipping company with a fleet of 90 ships, 37 owned and 53 chartered, with total capacity of 342,299 TEUs.

Maekawa

   Maekawa said the company is also trimming its sails in other sectors, and that plans to invest 500 billion yen between 2009 and 2011 have been reduced by half.
   In the car carrier business it has demolished or returned 20 ships because of a “drastic decline in the worldwide movement of automobiles.” But he noted, “Shipments of completed built-up cars are expected to increase in the long term while further diversification in transport routes and car lots is also surmised, hence restructuring is necessary so that we are fully equipped to provide the optimal vessel and service network in advance of others.
   “In the area of dry bulk and energy transportation, early termination and return of high-cost vessels and disposal of uneconomical ships have been completed, allowing us, albeit gradually, to regain business momentum,” he said. The company should expand energy transport “as the new pillar of profitability, through new businesses including offshore support vessels, ultra deepwater drill ships, and floating LNG producers.”
   Maekawa said owing to the measures the company has taken, earning capacity “has already seen rapid improvement, and our hopes are now much higher that we will likely return to profitability for fiscal year 2010 ending March 2011.”