Mitsui OSK Lines (MOL) has seen its interim profit fall by 45 percent to JPY 11.5 billion (approximately $105 million).
The drop in net income came even though there was a five percent increase in revenue of JPY 890 billion ($8 billion) for the period.
The company’s liner division reported a loss of JPY 10.8 billion ($96 million) for the six month period, compared to a drop of JPY 3.7 billion ($33 million) a year ago.
In a statement MOL said: “Although cargo volumes from Asia to North America and to Europe were firm on the back of economic stability in Europe and the US, cargo volumes to China and other Asian countries showed weak growth,” said MOL.
“On the North-South routes, the freight market experienced a substantial downswing due to a slump in cargo volume, particularly in cargo bound for the South America east coast.”
Dry bulk revenue increased 4.5 percent to JPY 418 billion ($3.7 billion), however operating income fell nearly 31 percent to JPY 16.5 billion ($147 million).
“In the dry bulk market, although capesize bulkers saw firm volumes of iron ore in the pacific area on the back of expansion in iron ore shipment capacity in Australia, cargo volumes of iron ore from Brazil showed weak growth,” MOL said.
“A decline in the volume of coal imports to china in line with China’s economic slowdown also had an impact.
“As a result, the balance between vessel supply and demand fell short of a full-scale recovery, and market conditions were weak.
“The market for panamax and smaller size bulkers also struggled, following the same trend as the capesize bulker market, amid a fall in grain cargo volumes up to the summer.”
In regards to the tanker business, MOL announced that despite the fact the VLCC market was rather weak until June this year, the market seemed to recover until mid-August which was blamed on the weaker cargo volumes in the Middle East. The small product tanker market enjoyed good conditions in the Far East, but slow movement in the Atlantic market.
“Under such an environment, the tanker segment posted a profit in the first six months, largely reflecting the continued efforts to reduce fuel costs by slow steaming and improving operating efficiency by setting up pools with other operators,” MOL said.