Annual Report 2012


>> P.19

SERVICENETWORKUPGRADINGANDREORGANIZATIONASIA–NORTHERNEUROPE/MEDITERRANEANROUTESSTARTCOOPERATIVESERVICESWITHEVERGREENTOPROVIDETHEINDUSTRY’SHIGHESTSERVICEFREQUENCY.(APRIL2012)ASIA–NORTHAMERICAWESTCOASTROUTESINAUGURATEASHUTTLESERVICELINKINGQINGDAO,SHANGHAI,NINGBOANDLONGBEACH.(MAY2012)ASIA–NORTHAMERICAEASTCOASTROUTESREORGANIZETHEfiVELOOPSPERWEEKSERVICETOOPTIMIZESHIPTYPESANDPORTSOFCALL.(MAY2012)ASIA–SOUTHAMERICAWESTCOASTROUTESSTREAMLINESHIPALLOCATIONBYCONSOLIDATINGTHEPREVIOUSTWOLOOPSPERWEEKSERVICETOONELOOPPERWEEKBYDEPLOYINGLARGESHIPSWITHCAPACITIESFROM5600TO6400TEUCONTAINERS.(MAY2012)JAPAN–THAILAND/PHILIPPINES/VIETNAMROUTESBETTERRESPONSETOTRANSPORTNEEDSINCHINABYADDINGNINGBOANDDACHANBAYASDIRECTPORTSOFCALLALONGWITHSHANGHAI.(APRIL2012)OVERVIEWOFFISCAL2011INFISCAL2011,ALTHOUGHTHEVOLUMEOFCARGOBOUNDFORNORTHAMERICAANDEUROPEFROMASIADECREASEDDUETOTHEBUSINESSSLOWDOWNINNORTHAMERICAANDEUROPE,CARGOFROMNORTHAMERICAANDEUROPETOASIAINCREASED,ANDTHE“K”LINEGROUP’SOVERALLCARGOVOLUME,INCLUDINGCARGOONNORTH-SOUTHROUTESANDINTRA-ASIANROUTES,ROSEAPPROXIMATELY3%YEARONYEAR.ATTHESAMETIME,FREIGHTRATESCONTINUEDTHEIRDOWNWARDTREND,SHARPLYDETERIORATINGBEYONDINITIALASSUMPTIONSASARESULTOFWORSENINGOFTHESUPPLY-DEMANDBALANCEFORSHIPPINGTONNAGEDUETOTHECOMMISSIONINGOFNUMEROUSLARGECONTAINERSHIPSANDUNSATISFACTORYRESULTSOFEFFORTSTOLEVYSUMMERPEAKSEASONSURCHARGESANDRESTOREFREIGHTRATES.INADDITION,PERSISTENTLYHIGHFUELOILPRICESANDTHESTRONGYENCREATEDASTIFFHEADWINDFORTHECONTAINERSHIPBUSINESS.INTHESECIRCUMSTANCES,“K”LINEMAINTAINEDTHEREDUCEDflEETSIZEREACHEDAFTERTHEGLOBALfiNANCIALCRISISANDSTROVETOIMPLEMENTRIGOROUSCOSTREDUCTIONMEASURESSUCHASSLOWSTEAMINGANDMEASURESTOSTREAMLINESERVICEROUTES,INCLUDINGFEWERSAILINGSANDCANCELLATIONSINWINTER.HOWEVER,BOTHREVENUESANDPROfiTSDECREASEDYEARONYEAR,ANDTHECONTAINERSHIPBUSINESSOPERATEDATALOSS.FISCAL2012BUSINESSOUTLOOKALTHOUGHTHESENSEOFUNCERTAINTYABOUTTHEOUTLOOKFORTHEGLOBALECONOMYLINGERSDUETOTHEECONOMICTURMOILINEUROPE,WEEXPECTCONTINUINGGROWTHINCARGOBOUNDFORANDFROMASIANCOUNTRIES,WITHCHINAANDASEANCOUNTRIESBEINGPRINCIPALCONSUMERSANDEXPORTERSBECAUSEOFTHEIRINCREASEDPURCHASINGPOWER.ATTHESAMETIME,OCEANFREIGHTRATESHAVEfiNALLYTURNEDUPWARDIN2012AFTERFALLINGSHARPLYLASTYEAR.CONTAINERSHIPOPERATORSWILLPRESUMABLYCONTINUEEFFORTSTORESTOREFREIGHTRATESANDKEEPTHEMATASENSIBLELEVEL,ANDWEFORECASTTHATRATESWILLBEMAINTAINEDATALEVELTHATWILLMAKEITPOSSIBLETOSECUREPROfiTS.INTHISENVIRONMENT,“K”LINEWILLPROCEEDWITHMEASURESTOBOOSTCOSTCOMPETITIVENESS,PRINCIPALLYLOWERINGOFTHEOPERATINGCOSTPERCONTAINERMADEPOSSIBLEBYTHEINCREASEINVESSELSIZETHATWILLRESULTFROMTHECOMPLETIONOFfiVENEW8600-TEUCONTAINERSHIPSANDREDUCINGFUELCONSUMPTIONBYFURTHERUTILIZINGSLOWSTEAMING.INADDITION,WEWILLSTRIVETOINCREASEPROFITABILITYBYTAKINGMAXIMUMADVANTAGEOFTHEGROUP’SNETWORK,INCLUDINGOUROWNAGENCIESANDTERMINALS,ANDIMPROVINGANDEXPANDINGSERVICESONEAST-WESTTRUNKROUTESTOANDFROMASIAANDINTRA-ASIANSERVICESCENTEREDONJAPANANDCHINA.ONEAST-WESTTRUNKROUTES,WEWILLOPTIMIZETRANSPORTCAPACITYINLINEWITHDEMANDBYEXPANDINGCOOPERATIONWITHEVERGREENANDOTHERASIANSHIPPINGCOMPANIESINADDITIONTOPARTICIPATINGINTHEEXISTINGCKYHALLIANCE.WEWILLALSOPRESSAHEADWITHCOSTREDUCTIONSTHROUGHSTREAMLININGMEASURES,SUCHASREVIEWSOFSHIPALLOCATIONANDPORTSOFCALL.WEWILLSEEKTOIMPROVESERVICEQUALITYWITHOUTINCREASINGOPERATINGCOSTSBYMAINTAININGANDEXPANDINGSERVICEAREASANDINCREASINGSAILINGFREQUENCYANDWILLflEXIBLYRESPONDTOTHESHIFTINGOFALLIANCESINTHEINDUSTRY.ONFAST-GROWINGINTRA-ASIANROUTES,WEWILLIMPROVESERVICESTOANDFROMCHINAANDDEVELOPASERVICESTRUCTURETHATCANNIMBLYRESPONDTOMARKETEXPANSION.ONNORTH-SOUTHROUTES,WEWILLRESPONDTOCHANGESINMARKETCONDITIONSBYINCREASINGVESSELSIZEANDSTRIVINGTOBOOSTCOSTCOMPETITIVENESS.WEHAVECONCENTRATEDTHEMARKETINGOFSERVICESFORCARGOORIGINATINGINASIA,SPACEMANAGEMENT,EQUIPMENTMANAGEMENTANDSHIPOPERATIONCONTROLINSINGAPOREANDWILLSTRIVETOMAXIMIZEEARNINGSTHROUGHGREATERRIGORINPROfiTMANAGEMENT.CHANGEINTHENUMBEROFSHIPSINOPERATION(VESSELS)NUMBEROFSHIPSINOPERATION(ASOFMARCH31,2012)(VESSELS)8000TEUTYPE95500TEUTYPE183500TEUTYPE282800TEUTYPE32000TEUTYPE141400TEUORUNDER8TOTAL80TOPICS19ANNUALREPORT2012


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