Mitsui OSK Vessel Seized in China in dispute from 1936

The dispute between China and Japan hasn't hit the major headlines.   I guess China has become impatient and decided to "up the ante" a bit.

They seized a Japanese owned ship, the Boasteel Emotion.

From Bloomberg News

The Baosteel Emotion, built in 2011, is a 320-meter long ore carrier and is now docked at Majishan, according to data compiled by Bloomberg. The company’s shares fell as much as 2.2 percent today in Tokyo trading, while the broader Topix index declined 0.2 percent.
The legal dispute over the ship comes as Japan and China spar over islands both countries claim in the East China Sea, and over Japan’s wartime aggression. Prime Minister Shinzo Abe sent an offering to the Yasukuni Shrine in Tokyo, following the visits this month of two cabinet ministers to the site that honors Japan’s war dead, including World War II criminals.
The Shanghai Maritime Court ruled in December 2007 that the Mitsui Group should pay 2.9 billion yen ($28.3 million) in compensation, according to the court statement. The case was first filed with the court in 1988.

click here for link to article

MOL looking for cheap bulk carriers

Mitsui OSK (MOL) says now is the time to buy bulk ships, and they think they can raise the cash to do so.

“We’re willing to spend several tens of billions of yen on an acquisition,” Kenichi Yonetani, a senior managing executive officer at the company, said in an interview in Tokyo yesterday. He declined to elaborate further on possible targets.

Japan’s most profitable shipping line expects to be able to borrow funds as it has avoided the worst of a collapse in commodity-shipping rates by locking in fees through long-term contracts. The rates meltdown, caused by rising capacity and slower Chinese demand for iron ore, has pushed at least four dry-bulk shipping lines into bankruptcy.

“This year is a chance for people who can buy,” Yonetani said. “We don’t see a problem in getting financing from banks to pay for our investment.”

click here for article from Bloomberg

What to do with excess ships

APL has confirmed they are laying up vessels. Actually taking them out of service and parking them.

The downturn in shipping has been fast. Only a little over a month ago one of the execs at APL was saying the lines needed to reverse the current market downturn (ha).

From the Sept. 25th blog "Ocean Shipping Downturn.. duh"

"A senior executive of APL has called on individual container lines to take decisive action to reverse the current market downturn.

Dan Ryan, APL’s Greater China president, speaking at the second Containerization and Liner Shipping China conference in Tianjin, said that a negative scenario of financial market turmoil, low consumer confidence as well as rising inflation and commodity prices, compounded by historically high fuel prices, requires lines’ urgent attention.

Suggested solutions included carriers moderating growth aspirations, returning excess tonnage to the charter market, rationalizing and even suspending some services, and having stronger resolve to pass along bunker costs to customers.

“If we fail to take action, the industry could see a more significant downturn than we have seen in many years,” he said."

I have never worked for a carrier which actually laid up vessels. Sometimes we would dry dock them early. Normally if a trade got really bad we would try to start another service, or increase frequency in an existing service.

Looks like MOL has decided to take their excess tonnage and start an Asia / East Coast South America service.

The move follows the termination of the carrier's existing joint service on the route, operated with Singapore's Pacific International Lines.

The company said it will deploy five 3,000-TEU and six 4,250-TEU vessels on the new weekly service.

"By replacing some of current 3,000-TEU class vessels with larger and faster ships, MOL will provide stable cargo capacity and higher schedule integrity to meet customer demand in this growing market," the carrier stated.

Well, the problem with that is this market probably isn't really growing, with Brazil and Argentina facing the same problems as the rest of the world.

But, it's probably a better solution for MOL than just parking their ships.

I can't really think of too many trade lanes where it would be a good idea to put in ships.

Maybe Africa.

But you would probably need ships with onboard cranes to service a lot of those ports, and those ships are fairly rare.

MOL resigns from stabilization agreements

As reported in the JOC, MOL (Mitsui OSK Line) has decided to drop out of "stabilization" agreements from North America.

I am not sure what these agreements allow. It's either discussing vessel sharing, general rate increases, specific rates, or maybe capacity. Anyhow, the EU just pulled the plug on rate discussions to/from Europe. This is the official wording from MOL

"With the European Union's abolition of liner anti-trust immunity, it has become extremely difficult to align the business processes of our entire organization when its regional divisions must operate to differing standards," Masakazu Yakushiji, executive vice president of MOL's liner division, said in a statement.

I expect other carriers will follow suit.