Japan´s two major shipping companies, the Nippon Yusen Kaisha (NYK) and Kawasaki Kisen Kaisha “K” Line, predict a challenging market environment in 2023.
The Nippon Yusen Kaisha (NYK) President Nagasawa sees a far more challenging markets environment in 2023, and predicts that “the NYK Group as a whole will face a challenging year”.
However, the company expects both consolidated recurring profit and net profit to exceed one trillion yen for the full year of fiscal 2022, breaking the previous year’s record high. Ocean Network Express (ONE), Yusen Logistics, Nippon Cargo Airlines, and other businesses, such as bulk shipping, have secured significant revenue.
As President Nagasawa said about the current situation “global trends in 2023 will differ from those of the past two years”. The prolonged impact of COVID-19, soaring energy prices, inflation worldwide, and the following monetary squeeze triggered by the Russia-Ukraine conflict are causing concern about an economic recession. With consumer spending slumping in Europe and other parts of the world, ONE, a major driver of earnings, is facing a tidal wave in its business environment.
However, as he pointed out, the company prepared as many countermeasures as possible over the past two years, by implementing structural reforms in the dry bulk business, cost reductions in various areas, and other measures to dispel concerns about the future.
The situation will change drastically, as he notes, “but if we continue to fulfill our roles, we can achieve positive results.”
In March of this year, the company will announce a new medium-term management plan that will begin from fiscal 2023, and the management team is in the final phase of discussions. The plan has two critical points. First, to progress the company´s ESG management further under the plan.
In terms of Environment, NYK will upgrade its actions toward decarbonization. Further measures will also be taken by the group regarding the society and the governance.
The other point is the areas in which the Group will inject capital. “We should use this excellent opportunity for aggressive investment to make the NYK Group more resilient now and in the future. For example, investments in renewal, the environment-related business, new business of offshore wind power, next-generation revenue sources, such as autonomous ship operation; the logistics industry, where further growth is expected; securing the quality and quantity of human resources; and offensive and defensive DX strategies”, as NYK´s President said.
The other Japanese giant “K” Line and his president and CEO Yukikazu Myochin, delivered his New Year message by saying “that the financial results for the current fiscal year are expected to be the best ever”.
As he said in the Dry Bulk segment, Energy Resource Transportation segment, and Product Logistics segment, including Car Carrier Business, the efforts made in the previous fiscal year to restore cost competitiveness through structural reforms are bearing fruit, including fleet downsizing and the disposal of under-performing business, as well as the unrelenting efforts of each business unit to improve profitability. In the containership segment, where market conditions were particularly robust in the first half of the year, the best practices of the three companies became apparent and the effects of the integration were greatly demonstrated.
As Mr. Yukikazu Myochin furthermore said “Looking at the immediate business environment, a variety of unclear and uncertain situations have emerged that could have a significant impact on economic activities, including the protracted crisis in Ukraine triggered by Russia and the resulting surge in energy resource prices; the review of monetary easing measures in response to strong inflation and rapid interest rate hikes; and the direction of China’s zero-covid policy. This continues to make future demand very difficult to ascertain”.
Hoverer, he noted that there is no need to be overly pessimistic about the current uncertainties, and that should “always keep in mind our strengths and what is required of us as a shipping company, and be determined to create new value by improving the services and technologies unique to our group in order that we will be chosen by our customers”.