Weak profitability in the containership and bulker markets continue to impact the financial performance at Japanese shipowner K Line.
The company reported net income of just ¥10.8bn ($72.7m) for the third quarter against the ¥72.8bn seen 12 months earlier, figures just released show.
K Line’s containership arm lost ¥2.4bn in the third quarter against a profit of ¥60.7bn in the corresponding quarter last year.
Net income at its dry bulk operation was little improved on last year’s loss of ¥2.9bn with a small loss of just ¥1.1bn, the figures show.
K Line said its containership business was impacted by sluggish freight rates over the short-term due to weak consumption growth and a continued softening of market tightness due to an increase in new ship deliveries.
K Line added that while it tried to reduce costs through blank sailings during the winter and streamlining services, income decreased significantly year on year.
In the dry bulk space, K Line said profits deteriorated as the capesize market softened at the beginning of the fiscal year because of the vessel supply-demand balance deteriorating due to further easing of port congestion.
However, conditions began to improve in late September due to a recovery in the demand for the transportation of bauxite and other unnamed factors.
“Market conditions for panamax and smaller sizes deteriorated at the beginning of the fiscal year due to factors such as a decrease in coal and steel transport to remote locations such as Europe,” K Line said.
“However, they have been improving since mid-August due to port congestion caused by demand recovery for grain transport and utilisation rates being lowered by factors such as the Panama Canal drought.”
Looking ahead, K Line predicts an improved fourth quarter with net income set to be ¥31.1bn. All the major divisions are expected to return to profit with a strong performance by its car carrier business.
“Despite concerns about global economic stagnation, geopolitical risks and other factors, the supply demand balance is expected to remain tight in car carrier business due to the recovery in vehicle production and shipments associated with the easing of constraints on the supply of semiconductors and auto parts,” K Line said.
While its containership arm experienced a worse-than-expected deterioration in market conditions during the third quarter, K Line said things have begun to recover in the fourth quarter.
