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From 2002 to 2008

From a V-Shaped Recovery to Sustainable Growth

Establishment of a Ship Management System

Due to rapid expansion of "K" Line's fleet and operational scale under the medium-term management plan "K"LINE Vision 2008+, it became an urgent task to further strengthen the ship management system to support safety in navigation and cargo operation.

In 2006 "K" Line announced two measures:

  1. Global development and strengthening of competitiveness of ship management companies within the group;
  2. Striving to acquire and foster maritime technical personnel on a global scale, based on concept of "K" Line Maritime Academy (KLMA).

A characteristic of "K" Line's ship management is that almost all ships in its fleet are managed by "K" Line Ship Management Co., Ltd. (KLSM) and Taiyo Nippon Kisen Co., Ltd., ship management companies within its group. KLMA is the collective term for training facilities in Japan and overseas, the global education policies that support them, including standardization, etc. of education and training programs and curriculum.

Based on this concept, "K" Line opened new KLMA (India) training center in Mumbai in 2007. In 2008 it increased the scale of its Philippine training center two and a half times its former size and moved it to the city of Pasay, establishing it as a new training center, KLMA (Philippines). This is now the primary facility of the KLMA concept, and training is conducted there under a policy of "fostering maritime technical personnel of the "K" Line Group, irrespective of nationality." In addition to its most modern training devices, it is also equipped with accommodations for 110 people plus dining facilities and a clinic with the most up-to-date medical instruments. It is able to host a total of 10,000 people each year for long-term training.

Implementation of Emergency Response Drills

Since 1988 "K" Line has implemented large-scale incident response training annually. Participants include members of Ship Safety Operation Promotion Committee, chaired by president of "K" Line, ship personnel, people from ship management companies and primarily the relevant people of "K" Line's headquarters. Such things as information gathering, handling and responding to incidents, press releases and press conferences are covered, as if all actions were real. After completion of the drills, a post-training meeting is held by participants, including the president, and improvements made to areas found to be problematic. "K" Line is continuing to carry out repeated marine incident response training, establishing a system so that marine incidents do not occur, and working to thoroughly handle and respond to incidents in the event they do occur.

Promotion of CSR

In order to manage promotion of corporate social responsibility (CSR) activities, the Environmental Committee established in 2002 was changed to the "CSR & Environmental Committee" in 2006 with an "Environmental Sub-Committee" and "CSR Sub-Committee" established as its sub-organizations.

"K" Line has set forth Basic Policies in promoting CSR activities, as follows:

  • Social Responsibility:
    We comply with all laws and regulations, respect social precepts, practice fair business activities, and make diligent efforts for safety in navigation and cargo operations as well as environmental preservation.
  • Social Contribution:
    We contribute to society through our group business activities.
    And, as a "Good Corporate Citizen" we positively serve the community.

In order to fulfill its mission, "K" Line is actively conducting a wide variety of initiatives to contribute to society that include making donations through Japanese Red Cross Society to countries affected by disaster, participating in UN World Food Programme (WFP), conducting voluntary clean-up activities, supporting education and training, collaborating with NPOs in countries other than Japan, and providing assistance when disasters strike.

"K" Line University

In order to foster a global workforce, "K" Line has conducted a considerable amount of training under the name of "K" Line University since 2002.

Principle purpose of this training is for employees of "K" Line's headquarters and overseas staff from group companies to learn together and boost mutual understanding, allowing them to feel a sense of being a member of the "K" Line Group. One of its purposes is having graduates of "K" Line University convey what they learn to colleagues at their respective places of work, thereby having more knowledge shared across the group as a whole. "K" Line University has taken hold as a global system, conducted not only at the Tokyo headquarters but in London and Richmond as well with a total of more than 400 staff members around the world having graduated thus far.

Consolidated Operating Revenues Exceed 1 Trillion Yen

In fiscal 2006 consolidated operating revenues set an all-time high for the 7th straight year, surpassing the 1 trillion yen barrier for the first time.

In fiscal year 2007 "K" Line continued active business operations and ship planning investment with all-time high amounts on a consolidated basis recorded for sales, operating income, ordinary income and net income, all of which greatly surpassed numerical targets for the final year of "K" LINE Vision 2008+.

Business Expansion in Fields of Growth and Growing Markets:

Containership Business - A Wave of New Ship Orders

In response to worldwide increase in trade volume in recent years, "K" Line has been rapidly enhancing its fleet with the most state-of-the-art ships since arrival of 21st century in order that our containership business division provides even more stable and prompt services.

From 2001 to 2002 "K" Line deployed thirteen 5,500 TEU class ships; from 2004 to 2005 eight 4,000 TEU ships (V Series); five G Series ships in 2006 as second stage to enhance our fleet of 5,500 TEU ships; and from 2006 to 2009, six 8,000 TEU class (H Series) ships intended for European shipping routes.

Along with enhancing the fleet, "K" Line also actively worked to expand and refine its services, introducing an Asia/India-North American East Coast service via Suez Canal in November 2006 through joint allocation of ships with YML, HJN and United Arab Shipping Company (UASC). This was "K" Line's first service via the Suez Canal, making it possible to offer direct service from India to USA as well as the Southeast Asian region.

For North-South shipping routes, "K" Line expanded fleet size from 1,300 to 3,000-3,800 TEU class for Asia-South Africa service in April 2007 and began Asia-South American East Coast service in June 2007 for the first time. In addition to existing North American East Coast-South American East Coast and Europe-South American East Coast routes, this new service rounded out connections between South American East Coast and three key locations of Europe, North America and Asia.

Dry Bulk Carrier Services - Strengthening Business Structure

One of the factors behind runaway growth of the dry bulk market that began in 2003 was an increase in iron ore imported by China. In 2005 China's crude steel production increased to nearly double that of the 1990s.

In light of these market conditions, "K" Line constructed three 300,000 ton class Very Large Ore Carriers (VLOCs) in 2004, the first under long-term charter contract with JFE Steel; second under long-term charter contract with ILVA, Italy's largest iron and steel company; and third for Nippon Steel Corporation.

In January 2006, K-EURO was re-organized with operations of the dry bulk division covering the Atlantic transferred to "K" Line Bulk Shipping (UK) Limited (KLBS), business operations now being carried out under independent managerial policies.

In June 2006 "K" Line created a department within Tokyo headquarters to develop dry bulk business in other countries, and established a system to promote operations overseas, based on close partnerships. This department set its sights on large expanding markets, secured new business opportunities through direct contact with customers and successfully executed numerous long-term contracts in India and South Korea. It subsequently achieved its major purposes and was dissolved in July 2008 in order to make way for new strategies.

Car Carrier Services - Independent Short Sea Transportation of Completed Cars in European Waters

Transport of completed cars in the European short sea region was previously conducted by E.H. Harms GmbH & Co. Car Feeder Service (EHHCFS), a joint venture financed in part with local capital, but was dissolved in June 2003. The following month "K" Line European Sea Highway Services GmbH (KESS) started independent operations, aiming to enable efficient provision of transport services by flexibly responding to demand for transport of completed cars in the European short sea region.

Entering New Fields - Heavy Lifter and Offshore Related Business

"K" Line first acquired capital in the German-based SAL Group in April 2007, re-launching its heavy lifter business. With a history starting in 1838, SAL Group operated 15 heavy cargo ships with strong reputation for its successful heavy cargo plant transport and marine technology.

Although "K" Line operated more than 10 heavy lifters that were largest among all Japanese shipping companies at that time in 2nd half 1970s, it withdrew from that sector in early 1990s due to continued rapid rise of the yen and weakening demand for plant transport from Japan.
However, as a result of expanding demand for plant transport due to increased demand for energy in recent years, "K" Line decided to reenter heavy lift service, collaborating with SAL Group by combining their heavy lifting know-how and "K" Line's worldwide network.

In November 2007 "K" Line entered the new field of offshore support vessel business ordering 6 ships, consisting of 2 large-scale anchor handling tug supply ships (AHTSs) and 4 large-scale platform supply vessels (PSVs) from Aker Yards in Norway.

In June 2008 "K" Line acquired, as its strategic partner, 15% of the shares of Flex LNG Ltd. (Flex), which is moving forward with floating LNG production projects centered on small- and medium-sized natural gas fields. Ahead of other companies, Flex ordered 4 floating LNG producers (LNGP) from South Korea's Samsung Heavy Industries, and is actively carrying out negotiations with several related parties in order to launch the project.

Business Development by KCH and Establishment of China Division

"K" Line established KCH in Shanghai in 1995 that has since set up bases in various other areas in China, constantly providing expanding customized services. In car carrier sector, in order to respond to expansion of China's domestic market and to participate in transport of completed cars along China's coast, "K" Line signed joint venture contract in November 2003 with China Shipping (Group) Company and established Orient Sea Highway Services Co., Ltd.

For logistics business, "K" Line established "K" Line Zhenhua Logistics (Tianjin) Co., Ltd. in November 2005, a total logistics company centered on warehousing business that responds to diversified needs from all regions of China as a single company.

With the purpose of transforming our presence in China so as to encompass all group companies as a whole, "K" Line established a China Division in June 2003. This was followed in January 2004 when "K" Line opened a liaison office in Beijing. In order to strengthen tramper business in China, a dry bulk business base was set up in Shanghai in February 2006. Activities in China have been steadily proceeding with number of "K" Line offices there reaching 20 as of March 2009.

Expansion into Emerging Regions

In addition to China, other BRIC nations, Eastern Europe, South Africa and ASEAN are seen as regions where rapid economic growth is expected in the future, and as such we are accelerating business activities in those regions.

First, "K" Line established "K" Line Brasil Ltda. in March 2007 in order to better control and manage agencies for containerships and car carriers in Brazil, where remarkable economic growth is taking place.

"K" Line next established a liaison office July 2007 in India with 2 main purposes: first was to strengthen dry bulk business. While collaborating with our Drybulk Project Business Division, the Indian liaison office concluded a long-term consecutive voyage transport contract with JSW Group that has been extended to 13 ships. The other purpose was to strengthen car carrier business in India.

In April 2008 "K" Line established 'K' Line (India) Private Limited. This company took over the agency duties previously conducted by United Liner Agencies of India (Private) Limited (ULA) and "K" Steamship Agency Private Limited. As general agency for containerships, car carriers, trampers and oil tankers encompassing entire Indian region, it is striving to enhance overall business strength of the "K" Line brand.


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