MOL considers greater focus on LNG than boxes during slump

MITSUI OSK Lines (MOL) may apply greater focus on shipping liquefied natural gas (LNG) and oil as oversupply of container capacity dampens freight rates and Drewry Shipping Consultants forecast that container shipping lines worldwide may to lose at least US$20 billion this year.

Separately, Maersk chief executive Nils Andersen said his company will also shift away from containerships and invest more in the oil and gas business as well as in container terminals and retailing.

MOL senior managing officer Koichi Muto said: "We need to reduce our exposure to containers." But Bloomberg reported that the company generates one-third of its sales from the container shipping trade.

This comes as MOL, which is said to be the "only one of Japan's big three shipping lines to predict a profit this year," anticipating earnings of JPY2 billion ($22 million) this fiscal year due to "demand for hauling coal and iron ore to China," the report said.

It noted that MOL has reduced its container ship fleet from 115 to 98 vessels since March as rates fall on lower demand from the US and Europe for Asian goods and containerships lie idle in a global glut of overcapacity.

Mr Muto said in the report that LNG and oil may be more stable markets as tankers are more expensive to build.

"There aren't as many competitors operating LNG and crude oil tankers," he said, adding that MOL plans to unveil a new mid-term business plan in March 2010.

Data compiled by Bloomberg indicates there are 322 LNG carriers in operation worldwide compared to 4,448 containerships.

Source: http://www.schednet.com