The management of Japan‘s shipping group K[ds_preview] Line is pessimistic for the development in 2017. One bearer of hope is the planned container ship joint venture with NYK and MOL.
In his today published »New Year Message«, K Line‘s President and CEO Eizo Murakami identifies »strengths and weaknesses« in the groups business, which comprises i.e. container, dry bulk, LNG shipping and a terminal segment. »In no sense can we be optimistic about the coming year. Nevertheless, it will be particularly important for each individual to execute his or her duties by being unwaveringly focused on personal role and organizational goals, with an eye to achieving the company’s goals«, Murakami said, emphasizing the goal of last year’s New Year Message, »to further raise our corporate strength by enhancing individual strengths, and aim to become a globally trusted corporate group.«
The president stated »various disruptions emerged against a backdrop of growing political and economic uncertainty«, and consequently the recovery of the economy and the business never gained much steam. Examples would be in Europe destabilizing factors like frequent acts of terrorism and the U.K.’s decision to exit from the European Union in June, intensifying concerns vis-à-vis the economic outlook. In addition, in China, the economy continued to slow as a result of concerns about excess capacity among domestic enterprises due to weakening demand. »Japanese domestic economy showed improvement in terms of its employment and income environments. However, sluggish consumer spending coupled with a strengthening yen during the year’s first half produced an economic landscape that lacked a feeling of stability«, Murakami added.
Som eyears ago, K Line had already initiated a »medium-term management plan«, which is a five-year plan that looks to 2019, setting out the road to take in attaining business targets. »However, the unprecedented turbulence that is affecting our main segments—namely Containerships and Dry Bulk Carriers businesses—has been difficult to counteract and is having a serious impact on our business performance.« Even K Line‘s strengths, which are according to Murakami generated from portfolio management — components of which include for example Energy Transportation Business and Car Carrier Business as well as Logistics Business and the fact of primarily medium and long-term contracts in Dry Bulk Carrier Business — would be »not enough to counteract the worsening performance of these two highly volatile segments«.
»Japan will triumph«
Consequently, the action plan already had to be reexamined. Nonetheless, Murakami named the planned joint venture for container shipping with Japan‘s other main carrier NYK and MOL as a bearer of hope. It is planned to start in 2018, but still a lot of work needs to be done: »We are executing a plan for structural reform of these businesses that we have operated independently for years. We need a business framework that is adapted to the current changes. The emergence of such a framework means that the liner trade of Japan, a nation surrounded by the ocean and built upon marine transport, will triumph with a robust organization built on the combined strengths of our three companies.«
For K Line, the CEO is confident »that we will successfully ride out the stormy seas that lie ahead when each one of us faithfully executes his or her duties.« A new medium-term business plan is going to be announced.
