Japan P&I Club is looking to upgrade its business model to meet the changing needs of its mainly Japanese customers and to keep pace with competitors in the International Group of P&I Clubs.
The reforms are taking place under a corporate business plan, which it has named Leap Forward 2023.
In line with almost all of the other International Group members, Japan P&I said it would not seek a general increase this year.
The mutual said it is satisfied with its financial status, with free reserves coming in at ¥24.1bn ($212m), which fall well within the requirements of the European Union's Solvency II Directive.
However, the mutual is ready to increase the risk profile of its investment strategy in a bid to earn higher returns more in line with its International Group rivals.
In the last fiscal year, Japan P&I earned an investment return of about 2.9%. It has a BBB+ credit rating from Standard & Poor's.
Diversifying portfolio
The mutual's conservative strategy is based mainly on investment in national bonds, Japanese equities, and the Japan Real Estate Investment Trust. But it is ready to bring foreign securities into the investment portfolio.
Company director Hiroshi Sugiura said that as part of the reforms, the club has also been talking closely with its members to see what changes they would like.
As a result, amendments to the premium-collection strategy are also under consideration. The club wants to move away from the system based mainly on advanced and supplementary calls for a more even payment structure, which would provide its shipowner members with more certainty over expenditure.
Most of the International Group members have already updated their payment structures and, to a large extent, Japan P&I is playing catch up.
Another feature of the club’s development is to strengthen its foreign office network. This comes mainly in response to the internationalisation of Japanese shipping companies business and Japan P&I’s own efforts to expand abroad.
The global focus of Japanese shipping firms has been typified by the establishment of container line ONE in Singapore — a result of the merger between NYK Line, MOL and K Line’s liner divisions.
ONE's cover contested
ONE takes its tonnage on charter directly from its Japanese partners. However, it has been left to arrange its own charterer’s P&I cover, which it put out to open tender and is being contested on an international basis.
Japanese owners based around the inland sea in Shikoku and Hiroshima are also expanding abroad. These owners used to charter out mainly to Japanese operators, but are increasingly looking towards the non-Japanese operators for business. They have also established shipmanagement outfits outside Japan, mainly in Singapore.
Japan P&I itself is seeking to expand its business in Hong Kong, South Korea, Taiwan and China, increasing the need for a wider and stronger network of foreign offices.
However, the main initial focus will strengthen and integrate Japan P&I’s Singapore and London offices.
TradeWinds previously reported how Japan P&I has boosted its freight demurrage and defence team to improve the services it provides to its members and, in a similar vein, the club is also looking to develop its loss-prevention capability.
