Surging demand sparks recovery at Japan’s marine shippers

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Earnings at three major Japanese marine shipping companies are improving significantly, supported by strong demand for resource shipments to China.

Nippon Yusen looks to have generated a roughly 35 billion yen ($319 million) pretax profit in the nine months ended December — 15 times the year-earlier 2.2 billion yen.

Margins on bulk carrier shipments have widened as China has stepped up imports of iron ore. Anti-pollution regulations have led the country to use less low-grade domestic ore and buy more high-grade ore from South America and elsewhere. Imports of coal used in steelmaking are also on the rise, fueling demand for bulk carrier shipments. The Baltic Dry Index, a benchmark for setting shipping prices, reached its highest in around four years last December.

Demand is also strong for containerships, used to transport electronics, furniture, household products and other items. January-November container shipments from Asia to Europe rose 4% on the year to a record 14.41 million twenty-foot-equivalent units, or TEUs. Asia-U.S. shipments also climbed to a record level.

Mitsui O.S.K. Lines’ pretax profit is expected to jump nearly 70% to 23 billion yen. Kawasaki Kisen Kaisha likely logged a pretax profit of about 11 billion yen — a reversal from the 36.9 billion yen loss of a year earlier, when its container-shipping business slumped.

The trio created a holding company last July to merge container-shipping operations. The resulting entity, Ocean Network Express, will begin service April 1.

Earnings have rebounded more sharply than expected so far. But full-year forecasts will likely be conservative, owing to the possible negative effects of merger-related costs.

Source: 
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