NYK president: Subprime mortgage crisis shows global economies? frailty

NYK president: Subprime mortgage crisis shows global economiesÆ frailty NYK Group President Koji Miyahara marked the company's 122nd anniversary celebration Tuesday in Japan by saying that expansion in Brazil, Russia, India and China — the so-called BRIC nations — would enable NYK to overcome worldwide economic jitters caused by the subprime mortgage crisis in the United States.
   'The adverse effect of the subprime mortgage crisis in the United States has generated concerns over, among other things, the deceleration of housing investment and a slowdown in capital spending and personal consumption,' Miyahara said in a speech. 'By contrast, the economies of the so-called BRICs — Brazil, Russia, India and China — in general and China in particular continue to make remarkable strides, while those of European nations have also maintained steady growth. In Japan, meanwhile, steadfast economic growth is expected under the new cabinet. Thus, it may be said that the world economy as a whole is currently doing fairly well.
   Nonetheless, the subprime mortgage problem has unexpectedly exposed the risks and frailty of the globalization of the economy,' he continued. 'Despite these circumstances, the NYK Group is expected to achieve gains in both revenue and profit during the current fiscal year, thanks to the briskness seen in the bulk and energy market.'
   Miyahara said the biggest challenge the transportation company faces is continually rising fuel prices.
   'The most important medium-term challenge we face involves the surge in bunker-oil prices,' he said. 'In addition to the further enhancement of our fuel-saving efforts, I would also like to see reductions in operating costs through the execution of accurate business operations, and furthermore, the development and application of energy-saving technologies by the entire NYK Group.
   Meanwhile, he said that rate restoration for the transpacific trade has not been adequate, given rising costs.
   'In the liner division, in particular, freight-rate restorations have been insufficient, especially in the North America trade, and the surges in bunker-oil prices and overland transport costs, as well as a number of other adverse factors, have had great impacts,' he said.
   As for the air segment, Miyahara said it would take time for the company's airline, Nippon Cargo Airlines, to transition from old to new aircraft.
   'With regard to Nippon Cargo Airlines Co. Ltd. (NCA), we need to immediately reinforce its business infrastructure,' Miyahara said. 'NCA is currently in the midst of major structural reforms, such as the replacement of old planes with cutting-edge aircraft and the independence of operation and maintenance systems. Unfortunately, sharp rises in fuel prices and the sluggishness of the market for flights to and from Japan have created a less hospitable environment, but if NCA steadily expands its global network, the company should emerge two years later from its structural reforms as one of the most competitive airfreight carriers in the world.'