Thursday, April 02, 2009
Tokyo: Mitsui OSK Lines (MOL) president Akimitsu Ashida has delivered a speech on the company's 125th anniversary putting the current eeconomic crisis into historical perspective.
"It seems to me that now is an opportune moment to reflect on the severe challenges and battles our predecessors faced, and remember how they dealt with those ordeals and overcame the difficulties they were confronted with," began Ashida.
Employment was his first topic. "Since the outbreak of the financial crisis last year, the issue of employment has taken center stage across the world.. "he said, before reminding that MOL shed over 3,000 seafarers, 60% of its total, back in the shipping slump of the 1980s, as part of the company's “Emergency Employment Adjustment Plan”. As a result, MOL was able to shift the composition of its seafarers to one that was more multinational and recover its global competitiveness, he said.
Cash-flow was the next topic, to which Ashida said MOL must pay more attention in the current tight financial market conditions. "While our company profit level was minimal prior to year 2000, cash-flow was almost balanced, with the replacement of existing vessels being a major facility investment,' he related. "After year 2000, when our profits increased, pushing up our cash-flow, we were able to embark on a major fleet expansion plan using the cash generated by these profits. By doing this, we were able to dramatically enhance the fundamental strength of our business operations. However, in order for us to continue receiving the vessels we contracted before the current economic collapse, we must maximize operating cash-flow and keep our finances in good shape."
Then came Globalisation. With cargo transportation to/from Japan likely to decline during the recession, Ashida said "We must take the approach that the entire world is our local market at arm’s length." In particular, there remains huge potential for cargo transportation in regions such as China, India, the Middle East, Central and South America, and Africa, he said. For this reason MOL must adopt a more globally competitive business system, he added, "with daily operations (business activities, back office operations, etc.) performed at the most optimum location by the most competent staff which give the best cost performance".
"Now, we are facing an economic crisis such as none of us have ever experienced", concluded Ashida, remembering in the same breath the proverb "adversity makes wise' the old adage about clouds and silver linings. "Global seaborne trade has fallen, but the world economy will certainly recover and ocean shipping will return to growth sooner or later. Our company has moved swiftly to adjust its fleet size as an emergency response to the current declining cargo traffic. While our initial fleet plan to reach 1,200 vessels by 2012 will now be slightly delayed, we are continuing our preparations to expand ship management capabilities to accommodate our original plan." [01/04/09]