Supply, demand keeps liner boss on edge

It was difficult to feel relaxed about the shipping market when the supply and demand balance for vessels was considered, said Mitsui OSK Lines president Koichi Muto.

The MOL boss was referring to the number of new ships that have entered the market or will be delivered this year. While the other two giant Japanese carriers, "K" Line and NYK reduced their capacity, MOL's capacity in the past year increased by 17 percent, according to market intelligence outfit Alphaliner.

In a New Year message, Muto cautioned against his executives falling into a "crisis consciousness". He said while the group managed to use the sense of crisis to navigate its way back to profitability, it was time to look ahead and respond quickly to any changes in the market.

"A position of complacency with regard to safety and security in the current circumstances could easily turn into the hot bed of a future crisis," he said.

Muto took over the group presidency six months ago as the Japanese carrier rapidly strengthened its balance sheet, turning a 2009 loss of US$690 million into a profit of $310 million for the first half of 2010.

"We enjoyed a tail wind in the forms of the freight rate level and the cargo trade returning to levels close to those prior to the Lehman shock in the first half of fiscal 2008."

He said the turnaround was due to cost-cutting efforts, including streamlining the organisation, as well as a decision to implement slow steaming and enhance yield management.

The MOL president said in the global economy, the paths of the developed countries and the emerging countries were diverging. He warned that the major economies were not yet fully recovered.

"While the emerging countries are growing with strong momentum leading to further growth in the distribution of goods, Europe, North America and Japan, which make up 60 percent of world GDP, continue to be burdened by destabilising factors," he said.
(Source:www.cargonewsasia.com)