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Thursday, April 02, 2009

Kawasaki Kisen to Cut Car Carrier Fleet to 6-Year Low

Thursday, 02 April 2009

Kawasaki Kisen Kaisha Ltd., a transporter of cars for Toyota Motor Corp. and Honda Motor Co., will scrap six of its car carriers and return another 11 to owners as its slashes its fleet amid a slump in auto demand. The shipping line will reduce its fleet of ocean-going car carriers to 74 at the end of March 2010, the lowest in about six years, Eiichi Murakami, head of car carriers, said in an interview in Tokyo on March 30. It will still take delivery of 10 new car carriers this fiscal year, he said.
The company, which launched the world’s first car carrying ship in 1970, has said profit likely fell 64 percent in the fiscal year ended yesterday as demand for shipping cars, iron- ore and containers slumped. The shipping line scrapped six car carriers last quarter as Japan’s vehicle exports tumbled the most on record.
“The level of car exports is unlikely to return to previous levels,” said Mitsushige Akino, who oversees $615 million in assets in Tokyo at Ichiyoshi Investment Management Co. “We’re seeing a structural change in demand rather than just a cyclical dip.”
The Tokyo-based shipping line follows Nippon Yusen K.K., the world’s largest car shipper, in scrapping carriers as the worst U.S. car market since 1981 forces Japanese manufacturers to reduce output.
Kawasaki Kisen rose 3 percent to 314 yen at the close of Tokyo trading today, paring its loss this year to 24 percent.
500,000 Fewer Cars
“I haven’t experienced anything like this slump,” said Kawasaki Kisen’s Murakami, a 37-year veteran of the company. “It’s much worse than our forecasts.”
K-Line, as the shipping line is also known, in January cut its profit forecast to 30 billion yen ($305 million) for last fiscal year, from an earlier prediction of 71 billion yen. Murakami declined to comment on how much the car carrier business contributes to profit.
The nation exported 64 percent fewer vehicles in February, the biggest drop since the Japan Automobile Manufacturers Association began keeping figures on them in 1973.
K-Line will probably carry about 500,000 fewer cars this fiscal year, 17 percent less than last business year, Murakami said. The company probably transported just over 3 million vehicles in the business year ended yesterday, he said, compared with 3.2 million a year earlier.
“I’ve never seen demand fall so sharply in just a six- month period,” Murakami said. The shipping line probably transported up to half as many cars in the fourth quarter as a year earlier, he said.
Rebound From October
The shipping line started the fiscal year by boosting car shipments 5.9 percent in the first six moths to Sept. 30, as it carried 1.8 million cars.
Toyota, the world’s biggest carmaker, slashed domestic production last quarter and Nissan Motor Co., Japan’s third largest automaker aims to cut 20,000 jobs as it trims output worldwide.
“The slump in demand hasn’t hit a bottom yet,” Murakami said. “We may see a slow rebound in demand starting in the second-fiscal half year” beginning October.
K-Line had 81 car carriers for ocean transportation last month, he said. The world’s fourth-largest operator of car transport ships, had a total of 102 car carriers at the end of March 2008 including smaller carriers used to transport cars in Europe. Larger rival Nippon Yusen had 113 at that time.
Source: Bloomberg