Making money in container shipping involves cutting costs, focusing on removing excess capacity - and logistics, NYK President Yasumi Kudo told the company in his review and outlook New Year's message.

"Owing to the Yosoro [internal corporate reforms] Project carried out in the wake of the Lehman Brothers shock, we have made significant progress in reforming our logistics business in the developed countries thereby improving our competitive edge by far," said Mr Kudo.

"The business of Double Wing Express (DWE), or non-vessel operating common carriers (NVOCCs), is on the rapid rise, which is expected to contribute greatly to our profits," he said.

Mr Kudo said keeping tonnage supply and demand in profitable alignment has worked for NYK and its fellow Grand Alliance partners Hapag Lloyd and OOCL.

"Thanks to such initiatives, the freight rate level has stayed within the expected range, which enables us to post stable profits. It should be noted that the tight supply-demand situation beyond estimation that we experienced in the first half of last year will not likely occur again for the foreseeable future, because slow steaming is already in place and there is growing supply pressure," he said.

But Mr Kudo warned the company had to be prepared to see profits levels fall, but that added that this could be successfully countered with gains in the logistics business.

He pointed to profits made in the rapid growth in automotive logistics. "Yusen Logistics Co Ltd took off in October last year, after the merger in Japan, to serve as the engine of our logistics business. Consecutively, the merger abroad is also developing at a faster speed than planned so that it will probably be 70 per cent complete by April this year and the expansion of our logistics business will speed up even more," he said.

Mr Kudo also said the group's fuel costs came to JPY200 billion (US$2.43 million) a year, even after the group-wide fuel-saving initiative. "If we can cut this back by, say, 10 per cent, it will not only save us a significant portion of costs but also reduce environmental load," he said.

Source: Shipping Gazette