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From 1998 to 2002

From Defense to Attack

First Investment in Containerships in Eight Years

The October 1998 amendment of the US Shipping Act created an arena that greatly improved freight rates as the most important aspect of the change was allowing individual shipping lines to independently enter into service contracts with shippers or consignees. With nondisclosure of freight rates also permitted, the brakes were put on wrecklessness in rate making in the North American trade due to freight rates recovering at a rapid pace. Consequently, the move into the black of "K" Line's containership business came within range. In light of those changes in the business environment and the aim of "K" Line to become a global mega carrier, eight 5,500 teu ships were ordered in December 1999, first upgrading of its core fleet since ordering five 3,500 teu ships in October 1991.

Following "K" Line's resumption of dividend payments in March 1998 and gradual recovery of its strength, another five 5,500 teu ships were ordered for a total of 13 x 5,500 teu ships.

Strengthening of Alliance

Korean shipping company Hanjin Shipping (HJN) joined 3-company alliance (CKY) in September 2001 forming CKYH with the aim to establish the foundation for competing on an equal basis with other mega carriers and mega groups, but based on a system of exchanging space, designed to supplement and streamline each company's services.

Strengthening of Asian Car Carrier Services

From late 1990s until early years of 21st century, "K" Line's key strategy for car carrier business was to reorganize and build up its Asian services. Automakers were actively branching out into Asia in expectation that cars would flow more easily between neighboring countries. In anticipation of automakers' future needs, "K" Line embarked upon the reorganization and bolstering of its main Asian services, expanding its Japanese and overseas sales structures with focus on Singapore and Bangkok, and introducing 2 newly-built 1,800-car capacity Pure Car Carriers into the Asian services in 2001, the Malacca Highway and the Makassar Highway, offering highest speed within Asian waters with flexible loading capacity.

Development of Dry Bulk Carriers Adapted to Modern Needs

"K" Line's dry bulk business received company-wide support through strengthening of its non-liner sector under the K.R. Program and New K-21, adding 150- and 170-type carriers (Dunkirkmax) to the fleet, made possible in the context of a quantitative and qualitative improvement occurring in the Europe-bound cross transport freight for important overseas cargo owners such as BHP, Hamersley and British Steel Corporation (BSC).

Enhancing the fleet with new ships continued from 2000 onwards as well with the 185,000 DWT large bulker Cape Future for Kawasaki Steel launched in July 2002.

Shift to Double Hull Tankers

In the oil tanker division, 6 double hull VLCCs were ordered between 1998 and 2006.

By 2003, all "K" Line VLCCs were double hulled, with its Aframax tanker fleet also upgraded. Rainbow River and Century River were launched in 1999 for transport of crude and heavy oil, mainly in the Asia-Pacific region, as advanced double-hull tankers.

Snohvit LNG Transportation Project

After extended and rigorous international bidding, "K" Line entered into a long-term charter contract in December 2009 with the Norwegian government-operated oil company, Statoil, for two new LNG carriers for the Snohvit Project. Snovhit was "K" Line's first Atlantic region cross-trade LNG business and first in which it accepted orders on a solo basis rather than part of a multi-company consortium. This also marked the beginning of "K" Line's subsequent expansion into LNG business as a major player and therefore was an epoch-making project. LNG carriers accepted by "K" Line for this project were to be the latest type with larger tank capacity (140,000 m3) than existing types, and reinforced hulls capable of withstanding extended periods of bad weather in the North Atlantic. Two carriers were launched in 2006, Arctic Discoverer built by Mitsui Engineering & Shipbuilding Co. and Arctic Voyager built by Kawasaki Heavy Industries.

"K" Line's expansion into LNG business subsequently led to new projects including an alliance with US EnerSea Transport and Korean Hyundai Heavy Industries for compressed natural gas (CNG) marine transportation research (2002), a contract for up to 10 years with energy trading company J & S Cheniere (2004) and 20-year contract for the Tangguh Project under leadership of British BP (2005).

Handling of Logistics Business

In order to restructure its logistics sector, "K" Line Air Service that had a worldwide network and "K" Line Logistics merged in July 2006, establishing a comprehensive logistics business company, "K" Line Logistics, Ltd. (KLL),. providing a unified air and sea distribution service portal with the aim that it become the core of the "K" Line Group's logistics business.

Starting in 2002 after commencement of coordinated operations of "K" Line Total Logistics (KLTL) with KAM in North America and "K" Line Air Service and Century Distribution Systems, Inc. (CDS) as core members, regional KLTL teams were subsequently set up in main bases around the world. In Thailand and Indonesia, warehousing, land transport, forwarding and other operations were also strengthened with a one-stop service system set up.

In January 2003, as the face of the "K" Line Group's logistics business, KLTL adopted a new service logo.

Under this unifying logo, each logistics company within "K" Line Group's logistics business went on to expand its own operations. Logistics business was positioned as a core that would enhance synergistic effects across all of the group's businesses, and as such each company aimed to create new corporate value, while making maximum use of the group's management resources and know-how.


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