Fleet reduction as K Line is facing losses
Japan’s third-biggest liner says its annual loss will hit $895 million, five times more than originally forecast Japanese shipping line Kawasaki Kisen Kaisha Ltd. said it will trim its chartered container fleet and slash its bulk-vessel count after warning it will lose an estimated 100 billion yen ($895 million) this year, in a new sign of mounting financial woes in the maritime sector.
The loss estimate is five times more than the company had earlier projected for the fiscal year ending March 31. The company, Japan’s third-biggest liner business, said cancellation of “uneconomical” charters for container ships and small and medium-size bulk ships will save about $90 million in costs.
K Line in partnership with ONE Ocean Network Express struggled with a poor start
“K” Line, as the company is commonly called, is a partner in the Ocean Network Express, a joint venture with fellow Japanese container operators Nippon Yusen Kaisha and Mitsui O.S.K. Lines formed in 2017 to combine business and cut costs amid broader consolidation in the shipping industry.
ONE got off to a poor start to operations last year as it struggled with what it called “teething troubles” of a new information-technology system that led to booking delays and led some angry customers to switch to other operators.
K Line celebrating its 100 birthday will restructure shipping focus
Over the past four years, the world’s top dozen operators have shrunk to six in an unprecedented wave of consolidation, but container shipping lines have entered this year broadly struggling with rising fuel prices, weak freight rates and an imbalance between capacity and demand on major trade lanes.
“K” Line, which turns 100 this year, said it will focus more on bigger dry-bulk vessels and chop down its car-carrier network. The carrier lost $9.3 million in its 2018 fiscal year, an improvement from the $1.25 billion loss the year before. The repeated poor results have sparked shareholder outcry, and “K” Line announced in December that Chief Executive Eizo Murakami will become chairman and hand over day-to-day management to Yukikazu Myochin next month.