“K” Line’s President & CEO, Mr. Eizo Murakami, recently gave a speech about the new year giving us all the opportunity to reflect on the past year and the ability to look forward to the challenges ahead.
Mr. Murakami began by reflecting on 2016 and the concerns that an economic slowdown in emerging nations would spill over to the developed nations. However, as the year progressed, the global economic situation gradually recovered, with temporary instability in the international financial market settling down amid signs that the slowdown was braking. On the other hand, various disruptions emerged against a backdrop of growing political and economic uncertainty, and consequently the recovery never gained much steam.
From his view in Japan, sluggish consumer spending coupled with a strengthening yen during the year’s first half produced an economic landscape that lacked a feeling of stability. The results of the U.S. presidential election in November went against the predictions of most pundits. Consequently, close attention will be given to how the yen, which showed a weakening trend in the immediate wake of the election, moves in the days ahead, as well as to how U.S. policies take shape after the new administration comes to power.
“K” Line’s five-year plan that looks ahead to 2019, when they will celebrate their one-hundredth anniversary, sets out the road to orient their business toward raising their corporate value. However, Mr. Murakami notes there has been unprecedented turbulence that is affecting their main segments—namely Containerships and Dry Bulk Carriers businesses— that has been difficult to counteract and is having a serious impact on their performance. Their strengths in other areas such as Energy Transportation, Car Carrier, Logistics, and Dry Bulk Carrier Business, are not enough to counteract the worsening performance of these two highly volatile segments.
Most importantly of all, Mr. Murakami wanted to mention the decision to spin off their Containerships and Overseas Terminal Business from their main businesses and reestablish them in a new joint venture run by the three companies. They are in effect, executing a plan for structural reform of these businesses that they have operated independently for years. Previously, the three companies had decided to start joint ship assignments primarily on the East-West routes (Asia-North America, Asia-Europe, and Europe-North America), as members of the same alliance in April of this year. Mr. Murakami says the new containerships business strategy for the future will be as follows: To fight equally with overseas competitors that pursue economics of scale by applying cost competitiveness generated from the size of their combined fleets and integrated systems together with sales competitiveness developed over the years. It is a strategy that takes a medium- and long-term perspective shared by all three companies. From this integration a business framework capable of generating profits even when market conditions are as bad as they are now will be established.
The new joint venture will begin operations in 2018, the same year that marks the 50th anniversary delivery of “Golden Gate Bridge” as ”K” Line’s first full containership. The environment Containerships Business over the past fifty years has changed greatly, particularly in terms of its expanded size. Business framework needs to be able to adapt and change, and that means the liner trade of Japan, a nation surrounded by the ocean and built upon marine transport, should have an advantage built on the combined strengths of the three companies.
Mr. Murakami ended his speech by saying, “This means we will be executing revolutionary changes toward becoming a revitalized “K” Line. I am confident that we will successfully ride out the stormy seas that lie ahead when each one of us faithfully executes his or her duties with an eye to personal goals, making maximum use of our strengths as a comprehensive shipping line group and with a spirit of fearlessly facing new challenges that is founded on high organizational targets. We will be formulating and announcing a new medium-term business plan to fit with this restructuring of our Containerships Business. Nonetheless, there will be no change whatsoever in our corporate principle and vision, including our initiatives for environment protection. With tireless effort to ensure safe and precise marine transport, and in response to social demand for environmental conservation, let us step forward boldly to tackle front-line challenges. And as we aim for sustainable growth, let us also be sure that the interests of the “K” Line Group and society are one.”