As the 19,000 teu ‘CSCL Globe’, currently the world’s largest containership, arrives in Europe on its maiden voyage from China, Mitsui OSK Lines (MOL) president, Koichi Muto, has raised the stakes again by announcing in his New Year message that the shipping line’s strategy is to upgrade its fleet with 20,000teu ultra-large container vessels (ULCV).
Having celebrated its 130th anniversary last year, he admitted that the line’s business results are projected to be considerably less than the outlook forecast at the beginning of the year.
“In truth, we were tossed about by rough waves throughout, and it became a very severe year,” he stated.
“Specifically, I regret to report that the containership division is showing a significant deficit for this fiscal term due to lower freight rates on Asia-South America East Coast routes, along with delays in the work to fully automate our US terminal, despite increasing cargo volume, mainly on the East-West trade and considerable improvement in the business environment.”
While other shipping lines have been investing in larger vessels over recent years to benefit from the economies of scale, Mr Mutu acknowledged that MOL was “somewhat behind” in terms of competitiveness and earnings strength within the industry.
“As far as the structural problem our containership division faced, we have already taken steps to reform the business, such as upgrading the fleet with the world’s largest containership – 20,000 teu – to make us more cost competitive,” he announced, although he did not elaborate on any orders.
“With global economic expansion, containerised cargo trade is certain to keep growing so the containership business, including container terminals, represents a growth opportunity. The true value of the company is determined [by] how we can add value that our customers will appreciate, and come up with ways to enhance cost competitiveness,” he continued.
Stressing that there is still room to “improve profitability with advancement of operations and yield management”, he stated that those in the containership division needed to objectively analyse the line’s cost competitiveness and sales capabilities, and put every effort into restoring profitability as the key objective.
“This is the critical point. Now is the time to be tenacious and move forward,” he affirmed.