TOKYO-based research firm Teikoku Databank Ltd is predicting that the number of Japan’s shipping industry companies exiting the market may start rising again going into 2016 given that “cargo movements are expected to remain sluggish amid a slowdown in the China economy and a global ship oversupply is still continuing,” it said.
The number of shipping industry players withdrawing from the market, including as a result of voluntary closures and bankruptcies, has been declining since fiscal 2011, standing at 28 in fiscal 2014, which ended in March.
Of the 28 companies that pulled out of the market four were ocean going shipping firms and seven were domestic shipping firms. The remaining 17 were ship-leasing firms.
Despite their improved business performance in fiscal 2014 when the overall revenue of Japan’s ocean-going shipping reached JPY4.61 trillion (US$37.9 billion), Japan’s ocean-going shipping firms “will now face low-visibility conditions due to the China risk”, the research firm said, reported IHS media.
Teikoku Databank’s warning follows the collapse of Daiichi Chuo Kisen Kaisha, a equity-method affiliate of MOL and mid-size Japan shipping firm, which filed for bankruptcy protection on September 29, leaving behind debts of JPY120 billion, after it was hit hard by the economic slowdown in China and higher fees to charter vessels.
MOL also incurred a group net loss of JPY241 million yen in the first half of fiscal 2015 – its first half-year group loss in three years, which the company blamed on an extraordinary charge of JPY26.2 billion resulting from the collapse of Daiichi Chuo Kisen Kaisha.
There were a total of 1,275 players in Japan’s shipping industry: 77 were ocean-going shipping firms, 584 were domestic shipping firms, and 614 ship-leasing companies.