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Dry Bulkers China’S Growth

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Dry Bulkers China’S Growth Overview of Operations port contracts. This was eventually raised from 40% to over 60% Global Seaborne Trade of Major Dry Bulk Cargoes during the course of the three years that followed. (Millions tons) Bulkships Since then, however, market conditions have worsened much 3,500 12% more than we predicted, including the Baltic Dry Index hitting 3,000 10% record lows as cargo fl ows stagnated with the slowdown in Dry Bulkers China’s growth. Considering the external environment, it is 2,500 8% unlikely for the time being that market conditions will recover to 2,000 6% the point we had predicted in fi scal 2012. Determining the need 1,500 4% to react swiftly to this new reality, we again implemented a 1,000 2% round of reforms. In this round, as for small- and medium-sized dry bulkers, we 500 0% Consolidated Revenues Breakdown (FY2015) will essentially withdraw from operating free vessels on the spot 0 2010 2011 2012 2013 2014 2015 -2% Director General of market that are not backed by cargo demand. In other words, General Cargo Carrier/ Kenichi Nagata Executive Vice President Dry Bulk Business Unit í í í í we will considerably streamline our fl eet to a level in line with Iron Ore Coking Coal Steaming Coal Grain YOY % Heavy Lifter Source: Clarkson 8% the number of cargo contracts we have accumulated. Our main Steaming Coal Carrier* aim is to concentrate on defi nitively meeting the cargo transport Vessels Supply (Capesize) (Number of vessels) needs of our customers. At the same time, we are further % Iron Ore and Fiscal 2015 in Review 10 300 24% Coking Coal enhancing our competitiveness by lowering the vessel costs of Wood Chip Carrier Carrier The dry bulker market in fi scal 2015 remained at historic our remaining core fl eet to match the current market. In addi- 10% 46% lows even into the new year. Autumn did not bring the tion, we will reduce free vessels for Capesize bulkers as well. 200 16% General Bulk Carrier expected seasonal boost in demand. 26% As for Capesize bulkers, on the supply side, there was a In fi scal 2016, we will steadily carry out the single-year man- slight overall increase in the number of vessels as deliveries agement plan with the goal of completing the current set of 100 8% * From FY 2016, Steaming Coal Carrier business is included in the Energy Transport Business Unit. declined and more vessels were demolished due to persis- Business Structural Reforms. We will continue to tirelessly focus our efforts on returning to profi tability, recognizing the need to tently weak market conditions. On the demand side, howev- 0 0% Dry Bulker Fleet Table (Number of vessels) er, crude steel production fell in China, where the economy swiftly return to a growth trajectory by eliminating the factors At the At the continues to slow, causing iron ore imports to stagnate. that had negatively impacted the highly stable profi ts that our Vessel Type Standard DWT end of end of Use -1002010 2011 2012 2013 2014 2015 -8% Mar.2016 Mar.2015 Sentiment soured amid weakness in forward freight agree- long-term transport contracts generate. Steel raw í Deliveries í Demolitions YOY % Capesize 180,000 92 104 materials (iron ments (FFAs) and iron ore and other commodity markets. In Source: MOL internal calculation based on IHS-Fairplay ore, coking coal) addition, full-scale operations of 400,000-ton very large Underlined words are explained in the Glossary on page 18. Iron ore, coking Panamax 80,000 31 37 coal, steaming iron-ore Valemax carriers commenced, further reducing coal, grains, etc. Steaming coal, activity in the spot market. All these factors seem to have grains, salt, Handymax 55,000 60 72 contributed to the sluggish market conditions. The number Sustainability Highlights cement, steel products, etc. of scrapped Panamax bulkers did, however, increase greatly Steel products, Small handy 33,000 52 56 cement, grains, and deliveries of new vessels slowed. In contrast, new deliv- Installing Ballast Water Treatment Systems ores, etc. eries of small-sized vessels greatly eclipsed demolitions. With in Advance of new Environmental Wood chips, Wood chip carriers 54,000 41 43 soybean meal, etc. Chinese coal imports declining due to environmental con- Regulations Others (Heavy cerns, the market remained weak for small- and medium- Steel products, Ballast water, which is discharged while loading cargo, can lifter, General 12,000 54 55 plants, etc. cargo carriers) sized dry bulkers as overcapacity persisted. transport marine organisms around the world, negatively Total 330 367 We made diligent efforts to secure highly stable profi ts impacting marine ecosystems and biodiversity. Accordingly, with long-term transport contracts, improve operational effi - the International Maritime Organization (IMO) adopted the ciency and cut costs. Refl ecting the severe market conditions, Ballast Water Management Convention in February 2004, and its ratifi cation is under way. MOL developed a Ballast however, profi tability signifi cantly worsened year on year and, Portfolio Water treatment system in collaboration with manufacturers for the fi rst time since fi scal 2012, this resulted in a loss. Highly Specialized and, in fi scal 2014, set a policy of installing the system on the Company’s vessels before the convention takes effect. Fiscal 2016 Initiatives With a vigilant eye on the ratifi cation of the convention, we We implemented a new round of Business Structural have been installing the system and, in fi scal 2015, complet- Reforms in the fourth quarter of fi scal 2015 and recorded an ed installation on 30 vessels including dry bulkers. extraordinary loss, which included ¥117.4 billion for such Wood Heavy Lifters Variable Profits Ballast voyage departure port Destination port Firm Profits Chip and General related expenses as redelivering chartered-in vessels before Carriers Cargo Carriers maturity of charter contracts and selling owned vessels. Capesize We conducted the fi rst set of Business Structural Bulkers Reforms back in fi scal 2012. The central achievement of Small and those reforms was shifting sales and operations of free ves- Medium-Sized Destruction of the Bulkers sels to the shipping hub Singapore, simultaneously raising Marine organisms marine ecosystem the competitiveness of the fl eet by lowering vessel costs to then current market prices. At the same time, we focused on Unloading cargo and Loading cargo and taking in ballast water discharging ballast water [Dry Bulker] Capesize Bulker: AZUL BRISA Less Specialized raising the ratio of our fl eet that is covered by cargo trans- 34 Mitsui O.S.K. Lines Annual Report 2016 35 116mol_英文_納品pdf用.indd6mol_英文_納品pdf用.indd 34-3534-35 22016/07/27016/07/27 116:126:12 The LPG tanker business remained healthy in fi scal 2015. A Crude Oil: Global Seaborne Trade by Import major Chinese client became, as both a cargo owner and a ship- Country/Area (Million tons) owner, a member of the pool of very large LPG carriers (VLGCs) Energy Transport Business Unit 2,000 jointly operated by MOL’s subsidiary Phoenix Tankers Pte Ltd. This increased the fl eet size to a world-leading 29 vessels and secured 1,500 Establishment of the “Energy Transport new cargo on the United-States/China route. Business Unit” Fiscal 2016 Initiatives 1,000 Energy needs are diversifying. This includes the need to Although China is expected to continue stockpiling strategic respond to deregulation sweeping the electric power reserves of crude oil in fi scal 2016 and beyond, we foresee the industry. The Group established the “Energy Transport 500 number of new VLCC deliveries increasing year on year and the Business Unit” to comprehensively meet the complex needs of major customers, both in Japan and overseas, market softening. The division’s policy is to continue reducing 0 20102011 2012 2013 2014 2015 2016 (forecast) for petroleum, coal, LNG, ethane, methanol, LPG and market exposure and prioritize the accumulation of long-term, í China í Japan í Other Asia/Pacifi c í Europe í North America í Others other forms of energy. We reorganized the Sales highly stable profi ts. We will continue seizing favorable market Source: Clarkson Division to optimally place personnel and strengthen conditions and promoting the shift toward medium- and long- cooperation between sections. To ensure we propose term transport contracts. Vessels Supply (VLCC) (Number of vessels) Takeshi Hashimoto Akio Mitsuta and provide transport services most appropriate for The parcel chemical transport business operated by Tokyo Senior Managing Executive Offi cer Managing Executive Offi cer customer needs, we will continue to enhance our sales Marine Asia Pte Ltd. can be cited as a fi eld expected to accumu- 75 15% Director General of Deputy Director General of Energy Transport Business Unit Energy Transport Business Unit capabilities and cost competitiveness. late fi rm profi ts going forward. This business entails transporting small lots of various chemical products on ships fi tted with segre- 50 10% gated stainless steel tanks. This is a business that highly favors Fiscal 2015 in Review experience and knowhow related to the safe transport of chemi- 25 5% In fi scal 2015, the tanker division achieved a huge increase cal products and a proven track record in vessel management Bulkships in profi t due to favorable market conditions across all vessel and seafarer training. Moreover, this is a very diffi cult fi eld to 0 0% types. Thanks to an increase in real, non-speculative, oil enter as it is necessary to have a fl eet of the right size to ensure Tankers demand and a buildup in China’s strategic reserves amid effective deployment of vessels. Going forward, in this business, falling crude prices, crude oil transport demand also we will strive to stabilize and improve profi tability by consolidat- -252010 2011 2012 2013 2014 2015 -5% increased.
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