Business, Feature, Freight News, Sea

NYK Line: Red Sea Crisis to Boost Bottom Line

[ February 21, 2024   //   ]

Amidst third-quarter losses, Japanese shipping and logistics company NYK Line anticipates the Red Sea crisis giving lift to its bottom line in its fiscal fourth quarter.
NYK Line reported a net loss of US$1.04 billion for its third quarter ending Dec. 31, down US$5.18 billion from the year-earlier quarter. Revenue fell US$1.76 billion to US$12.08 billion. Recurring profit declined US$1.15 billion to US$1.35 billion.
Recurring profit for NYK Line’s liner business dropped US$4.61 billion to US$304 million on weak cargo demand due to higher interest rates and inflation primarily in Europe and North America. Revenue fell US1.76 billion to US$12.08 billion. Increased shipping capacity from the delivery of new tonnage also had a negative impact, despite a December rise in freight rates.
Handling volumes at overseas terminals declined year-on-year due to weak cargo demand and the September sale of an affiliate U.S. West Coast terminal to Ocean Network Express, or ONE, the alliance between NYK Line and fellow Japanese shipping lines Mitsui O.S.K. Lines and “K” Line.
NYK’s liner operation handled 155,000 TEUs of exports in the third quarter, down 5 percent year-on-year, according to its financial statement.


However, in its full-year forecast, NYK Line said that, though the outlook for the Red Sea crisis remains uncertain, it anticipates demand for space to increase, with higher market levels resulting in tighter supply and demand conditions,” the company said in releasing its results.
While cargo business is gradually recovering, “it will likely take some time for a full-scale recovery to occur.”
Liner business’ full-year forecast is for recurring profit of US$162 million, up US$20.3 million.
Overall, NYK Line anticipates net income of US$1.35 billion, down US$135.1 million for its full fiscal year. Revenue is expected to improve US$405.3 million to US$1.58 billion, with US$1.65 billion in recurring profit, a US$67.5 million improvement.

Other Segments

NYK’s logistics segment, which includes air and ocean freight and contract logistics, declined US$195.9 million in the third quarter to US$141.8 million. Its contract logistics business saw strong cargo traffic in its e-commerce and automotive industries within Europe and firm demand for general consumer goods in North America.
Full-year liner recurring profit is forecast to increase US$20.3 million to US$405 million.
Air cargo recurring profit fell US$344 million to US$33.8 million in the third quarter, while full-year results are expected to increase US$20.3 million to US$270 million. Soaring freight rates are expected to offset weak markets.
Bulk shipping, which comprises automotive, dry bulk and energy, slipped US$243.2 million to US$925.3 million in the third quarter, and is forecast to US$33.7 million to US$1.15 billion for the full fiscal year. Dry bulk is expected to exceed forecasts for the fourth quarter and full year.

NYK Line anticipates its liner business will turn a profit by year end. PHOTO: NYK Line