“Container ships suffered from vast declines in cargo trade in the main East/West routes and other routes and a weak freight rate market resulting in the recording of large deficits by many containership operating companies,” said a quarterly earnings report from Mitsui OSK Lines Ltd. The Japan-based ocean carrier added, “There are some improvements in the business environment during the second quarter as further restorations of freight rates were implemented for normalizing the business environment and cargo volume is ameliorating.”
For the six months ended Sept. 30, 2009, Mitsui OSK (MOL) reported revenues of ¥624.5 billion ($6.7 million), down from ¥1,094.7 billion ($11.86 million) in the prior-year period. Net income for the period swung from a ¥124 billion ($1.3 million) profit in 2008 to a ¥9.9 billion ($107,000) loss in 2009.
MOL was cautiously optimistic about the future, noting, “There are signs that the economy's downturn has almost stopped in the US to Europe and a rising trend is gaining steam in stock markets around the world. From these and other indications we can expect the bottoming out and recovery of the global economy.”
The company added, “Positive growth reemerged as markets increased in countries such as China, who maintains a steady growth based on economic stimulus measures costing RMB 4 trillion ($584 billion).” It added that “public investment and consumer spending rose despite the deteriorative factors of worsening jobless rates and declining capital investment witnessed even here in Japan.”
Looking specifically at container trade, MOL noted that as the second fiscal quarter started, “container operating companies were seriously aware of their large, ever worsening deficits with a market environment too harsh to endure.” One of the responses of the containership operators was to institute “freight rate restorations” while laying up more capacity. Carriers experienced improved rates and volumes as a result. On the operational side, another change was slowing ships to save on fuel consumption.
The results of the various efforts to reduce costs and improve revenues will take time to affect the carriers' bottom lines, says MOL.