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preface |
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History chart |
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1980-1989 Period with "K" Plan, New "K" Plan and the U.S. Shipping Act of 1984 |
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"K" Plan and New "K" Plan
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Emergency Rationalization Plan
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The Shipping Act of 1984 |
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1985:"Regarding Future Shipping Policy"
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MENU |
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In this Issue, we will present "K" Line's history from 1980 to 1989. The intensification of competition on North American liner routes in 1985 and the yen's sharp appreciation right after the Plaza Accord progressively diminished the Japanese shipping industry's international competitiveness and threatened Japanese shipping operations. |
 "CENTURY HIGHWAY" |
 "BISHU MARU" |
 "Double-Stack Train" |
 "MALACCA MARU" |
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In November 1982, "K" Line formulated and began implementing the Emergency Plan for Strengthening the Corporate Foundation ("K" Plan). These remedial efforts shifted to the Intermediate-Term Operational Improvement Plan (New "K" Plan) from 1984 to 1986 and then continued as the Emergency Rationalization Plan, which was carried out in 1987 and 1988. During these trying times, the Japanese shipping industry's labor and management agreed to implement emergency employment measures based on a voluntary early-retirement program for two years from 1987 to 1989. Crew members in particular endured these drastic measures aimed at ensuring the survival of the Japanese shipping industry. |
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"K" Plan and New "K" Plan |
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The yen's steady ascent and the protracted recession that simultaneously affected operating divisions were viewed as grave crises for management. To radically improve the company's operational structure, "K" Line proceeded to implement an Emergency Management Plan to cope with global recession. The plan rested on three pillars: a profitability improvement plan, efforts to modernize and increase the efficiency of operational systems, and a cost-cutting campaign carried out with the participation of all personnel. The plan produced the intended results. In 1984, the global economy appeared in danger of resuming its downward slide. This precarious situation was subsequently compounded by a rapid succession of events with a major impact on the shipping industry, including The Shipping Act of 1984 and the report of the Council for Rationalization of Shipping and Shipbuilding Industries. In response to these developments, "K" Line formulated the Intermediate-Term Operational Improvement Plan to swiftly establish the capability to resume dividend payments. |
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Emergency Measures (disposal of uneconomical ships, establishment of manpower plan for land-based and marine personnel) |
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Strengthening of operational capabilities (development of an internationally competitive fleet, strengthening of cost controls, promotion of new businesses) |
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Augmentation of financial measures |
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Modernization and increasing the efficiency of operational systems (increasing efficiency of land-based operations, reorganization and utilization of information and communication systems) |
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Cost-cutting and promotion of safe vessel operation Although this plan was reasonably effective in itself, "K" Line was unable to avoid substantial losses due to the protracted recession in the shipping industry and fierce competition on North American container routes. |
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Emergency Rationalization Plan |
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The prolonged weakness in the shipping market was compounded by the yen's steep rise following the Plaza Accord. Meeting this adverse operating environment head on in 1987, "K" Line formulated even more drastic measures on top of ongoing rationalization efforts. Based on this series of rationalization plans, which also encompassed affiliated companies, "K" Line united on a company-wide basis and strove to minimize deterioration in business results, thereby strengthening itself markedly. |
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This U.S. law is distinguished by being in accord with the idea of antitrust law, traditionally deeply rooted in America. More specifically, it narrowed the scope of antitrust law exemptions for shipping lines acting in concert (e.g. consortial activities). The 1984 act diversified consortium carriers' means of competing in terms of freight-rates and service. Rate competition consequently intensified on North American and related routes, ultimately resulting in the collapse of the PWC. In terms of the new law's impact on Japanese liner companies, the six major carriers had been continuously losing money on their North American-related routes since 1980. The intensification of rate competition caused these losses to swell. In sum, the 1984 Act undeniably accelerated the process of natural selection of shipping lines on North American liner routes. |
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1985: "Regarding Future Shipping Policy" |
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To adapt to these changes, "K" Line increasingly focused on operating independently-deployed ships on routes deemed viable on a solo basis. In addition, "K" Line proceeded to build operational organizations able to autonomously and nimbly meet shippers needs. In conjunction with the operation of independently- deployed ships, "K" Line has commissioned larger ships, thoroughly implemented fixed-day weekly service, built and extended self-operated terminals, augmented intermodal service in North America, and improved information systems. Through such means, "K" Line continues to this day to strive to augment its value-added services. |