Leaders of NYK, MOL and “K” Line also highlight the challenge of IMO sulfur regulations.
The leaders of Japan’s three largest shipping companies — NYK, MOL and “K” Line — spoke about the outlook for 2019 and beyond in new year messages delivered this week and expressed concern about increased protectionism and the challenges involved in making shipping more environmentally friendly, but also noted opportunities for growth.
The three companies consolidated their container operations in 2017 to form Ocean Network Express, which began operation in April and is now the sixth-largest container shipping company in the world behind Maersk, MSC, COSCO/OOCL, CMA CGM and Hapag-Lloyd.
But all three of the Japanese carriers are diversified companies involved in varying degrees in many different sectors of shipping (car carriers, liquid and gas tankers, dry bulk, breakbulk, heavylift and cruise), logistics and related fields.
Junichiro Ikeda, the president and chief executive officer of MOL, noted that in 2019, “the external environment has become increasingly uncertain in terms of the global political and economic picture, mainly due to strained U.S.-China relations and the possibility of a hard Brexit.”
Eizo Murakami, president and CEO of “K” Line, said in 2018, “although unstable conditions could be seen in some developing markets, such as the economic slowdown in Central and South America and currency depreciation in Argentina and Turkey, with the support of the strong United States economy, the worldwide economy on a whole remained firm.
“On the other hand, the trend towards protectionism, which has arisen in recent years, has grown even stronger, in particular the development of ‘America First’ policies by the United States has had a major destabilizing effect around the world,” he added. “On the trading front, the United States renegotiated the North American Free Trade Agreement (NAFTA), saying it was unfair, and brought about trade friction by imposing extra customs duties on imports from China. Such actions have greatly upset the global economy, and there is great concern regarding the effect they will have on trade, which is the very foundation of our business.”
He also expressed concern about “growing instability in the Middle East due to increasing international tensions with regard to Iran and Saudi Arabia.”
Ikeda noted that ONE “set sail in choppier waters than we had expected, as it did not reach its projected liftings due to disruptions in initial operations. However, the cost savings derived from integrating the containership operations have surpassed estimates before the integration. We also know exactly what must be done to improve cargo volume liftings and earnings. We will closely heed the lessons we have learned from ONE’s results to date as we fulfill our governance responsibilities as an investing company of this business venture.”
He vowed to “redouble my commitment to ONE and provide any support necessary to ensure the venture’s success.”
Murakami said, “ONE is making earnest efforts to recover the trust of its customers and by carrying out structural reforms, such as overcoming temporarily worsening factors like load reductions and reviewing its freight portfolio, is working to rebuild a corporate structure which can be relied upon to deliver earnings.”
Ikeda highlighted the impact that new sulfur oxide (SOx) emissions regulations promulgated by the International Maritime Organization that will come into effect in January 2020.
“It is no exaggeration to say that the enforcement of these regulations will mark a major turning point that will have a crucial bearing on the success of the MOL Group as well as the marine transport industry as a whole. We have less than one year left to prepare. Operational concerns notwithstanding, we need to re-examine whether our preparations are adequate on the sales and marketing fronts and identify any hidden risks,” he said.
Tadaaki Naito, the president of NYK, highlighted “digitalization and green initiatives.”
He said that “2018 was a year in which advances were made in connecting our technology to business opportunities, such as the development of diagnostic software for the engine combustion chamber and a water-content alarm for the fuel oil in order to prevent mechanical failures. We had the first major updates in 25 years to the vessel safety management system. Consideration is being given to the commercialization of an onboard cashless system.”
He said that in May NYK became “the first company in the ocean shipping industry to issue green bonds, which narrow down the use of the funds to projects that benefit the environment. I believe it was an opportunity for all stakeholders to recognize our stance towards the environment.”
In November, NYK unveiled an environmental “concept ship” called NYK Super Eco Ship 2050 that would be powered with hydrogen and solar power, be built with lightweight materials and incorporate technologies such as an air-lubricated hull, waste heat recovery, fuel cells and an innovate propulsion system that would replace conventional propellers with “flapping foils that mimic the movement of dolphins to deliver greater efficiency.”
If that seems like a far-fetched goal, Naito noted that the world is a very different place today than it was in 1989 at the beginning of the 30-year “Heisei period” in Japan’s traditional calendar that is expected to come to an end this April when Emperor Akihito steps down from the throne.
“In 30 years, it is possible we will live in a world that is hard to imagine today,” he said. By 2050, world population is expected to grow from 7.6 billion in 2017 to 9.8 billion in 2050; India is expected to overtake China as the world’s most populous country; and temperatures are expected to rise by 1 to 2 degrees in 2050 compared to 1996.
“As a result, abnormal weather events will occur around the world, and the ocean environment, including Arctic ice and coral reefs, will be negatively affected, and the impact on agriculture will be unavoidable,” he said, but “great strides have also been made in the fields of IT and biotechnology, and although it is not possible to show in numerical figures, those fields have the power to change how we live.”
Protectionism concerns Japanese shipping execs
