NYK Line has made an upward revision of its profit forecast in second quarter of the current fiscal year.

But it also faces an ¥18bn ($170m) extraordinary loss through the early termination of long-term capesize bulk carrier charter contracts.

The Japanese shipping company is attributing the upward forecast to a better than expected performance by its liner subsidiary One Network Express (ONE), a joint venture with Mitsui OSK Lines and K Line.

NYK Line said its operating profit for the year to the second quarter to 30 September will be ¥15bn compared to an earlier forecast of break even. The company said its net profit would be ¥18bn compared to the earlier forecast of ¥9.5bn.

The shipowner and operator said liner trade spot freight rates are firming thanks to an improvement in supply and demand.

“The earnings improvement of ONE is also expected to exceed expectations,” NYK Line said.

However, the Tokyo-listed also said it expects to register an ¥18bn extraordinary loss through the early termination of long-term capsize bulk carrier charter contracts.

The company said it considering cutting back its capesize chartered fleet because of the impact of the coronavirus pandemic on trade. NYK Line said it wanted to get rid of capesize bulkers with “long-term contracts at fixed costs but no long-term cargo contracts, which had been a concern for some time”.

Although NYK Line did not disclose how many contracts it wants to terminate, TradeWinds understands it plans to remove six capesize bulk carriers from its fleet.

The move is likely add to an active market in capesize bulk carrier sales this year as Japanese owners seek to dispose of tonnage that has been returned form charter contracts.