| Annual Report 1999 | (For year ended March 31,1999) |
Business Review |
| Marine Transportation | |
| Bulk Carrier and Car Carrier Services | |
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| Operating revenues from bulk carrier and car
carrier services for the term under review amounted to ¥167,558 million (US$1,390 million), down 0.5%. |
| Bulk Carrier Services |
| During the year, the bulk cargo trade was generally
sluggish. Demand for large bulk carriers declined due to a fall in demand for such raw
materials as iron ore, caused by a reduction in crude steel production in Europe, Japan,
and other Asian countries. Demand for medium-sized bulk carriers was also sluggish due to
the continued economic turmoil in Asia. In addition, the increased cargo space of
newly-built vessels adversely affected the supply/demand picture. Market conditions
remained unfavorable for small bulk carriers, with no signs of recovery. Although we stepped up sales activities to secure profitable cargoes, rejuvenated our fleet, and practiced efficient ship assignment, the overall performance of bulk carriers fell below the previous year. In fiscal 1998, "K" Line's bulk carrier fleet consisted of approximately 7.2 million DWT, which carried roughly 46 million tons in cargo volume. The Company's long-term goal is to bring total shipping tonnage up to 10 million DWT keeping steady steps forward. |
| Car Carrier Services |
| We adequately responded to Japan's increased car exports
with maximum efficiency in the assignment of our own fleet and of vessels chartered on a
short-term basis. At the same time, we made vigorous efforts to increase cross-trading and
import cargo. As a result, the overall performance of car transportation was virtually unchanged from the previous year. In fiscal 1998, "K" Line had a fleet of about 60 vessels with approximately 750,000 DWT, of which transport volume reached 1.6 million (increase of 260,000 units over previous year). It is predicted that car transport will diversify in increasing trade patterns and cargo volume as a result of carmakers' globalization and world-wide realignments leading to PROLIFERATION of production sites. In order to comply with such diversity, "K" Line will further enhance the organic combination of ex-Japan and other trades as well as cross trading and keep its fleet as required to meet customers' demand for frequent and immediate transport of various types of cars including MPVs or SUVs and other large vehicles. As to cross-trading, we are endeavoring to improve its service network in the Atlantic. The main haul routes it serves include (a) U.S. East Coast-The Mediterranean Sea-North West Europe-Mexico-U.S. East Coast Shuttle service, (b) Mexico- U.S. East Coast-North West Europe Shuttle service, (c) The Mediterranean Sea-North West Europe-South America East Coast Shuttle service, (d) The Mediterranean Sea-North West Europe-South America East Coast-Caribbean Sea/Mexico-U.S. East Coast-The Mediterranean Sea Round service, and (e) The Mercosur region Shuttle service. During the year, we ordered five large-sized car carriers capable of carrying 5,000 automobiles to replace existing ships. They will be all present to join "K" Line's fleet of car carriers until June, 2000. |