In response to the current freight rates in the dry bulk shipping industry, Japanese shipping company Nippon Yusen Kaisha (NYK Line) is planning to take a number of its Capesize bulkers out of service for a period of months, or even years, until demand is restored, Platts cites the company’s Manager of Capesize Chartering Izuru Ehara.
Out of the two possible options – to charter or to lay-up – Ehara said that the second seems to be more economically favorable.
Only a month ago, NYK Line decided to put three of its Japanese-made bulkers out of service, namely the 179,420 dwt Frontier Harvest, the 174,707 dwt Frontier Wave and the 174,845 dwt Frontier Discovery, as the company does not “see sense in fixing the current spot business,” Ehara said to Platts.
As of the end of January, some ten Capsizes were expected to be put in cold storage, including the three from NYK.
However, many owners are reluctant to start this practice as they believe the cold lay-up would affect the vessel’s performance in the long run.
The Capesize market was sluggish throughout the 2015 as it was affected by a bearish iron ore market, low bunker prices and a global tonnage oversupply.
“Too many vessels is the biggest reason [for the bearishness] as far as the Capesize market is concerned. Cargoes are moving constantly, and frankly we don’t suffer from a lack of cargoes — and still the freight rates are nonsense,” Platts quoted Ehara.
NYK Line has downgraded its expectations for the full-year consolidated results as it posted an extraordinary loss resulting from an impairment of fixed assets in its consolidated financial results for the third quarter of the fiscal year ending March 31, 2016.
The company reduced the book value of bulkers to their respected recoverable amounts, resulting in an extraordinary loss of approximately JPY 33.5 billion (USD 277.5 million).
As a result of this reduction, NYK Line expects to incur a loss of JPY 29.7 billion under extraordinary losses in its non-consolidated financial results for the fiscal year ending March 31, 2016.
The company’s net profit for the first nine months amounted to JPY 22.82 bn, down 19.8 % from the previous year. NYK’s full year profit forecast was downgraded to JPY 25bn from JPY 47bn.
World Maritime News Staff