Major Q&A during Analyst Meeting for 1st Quarter Fiscal Year 2008
(Containership Business)

Q1:     Under prospects for Containership freight rates during 1st Half of this Fiscal 2008 indicated in slide B-4-1, please let us confirm whether fuel surcharge is included in these figures.
A1:     Fuel oil surcharge is included in the average freight rates.
Q2:     How did you set freight rate assumption for the 2nd Half?
A2:     As to the route from Asia to North America, because most contracts are on annual basis, average rate level during the 2nd Half is expected to be almost the same as originally prospected. Base rate for the backhaul from North America to Asia is prospected to improve apart from bunker surcharge.
In westbound Asia-Europe trades, freight rate level is in soft tone due to supply demand balance being eased. Regret to say we cannot expect much improvement for the latter Half of this year, and the base rate excluding the fuel oil surcharge is further worsening for year-on-year basis from what we forecasted as of this April.
Q3:     Please explain background for Container Business performance worsening quarter-by-quarter. As you succeeded to introduce fuel oil surcharge to some extent, which I understand reflects fuel cost up slightly after actual price rises, I wonder if the loss you calculated might be reduced as time goes by.
A3:     We can say the reasons are summed up in fuel oil price hike.
  Though the ratio for recovering bunker oil cost increase with fuel surcharge was under 50 percent for 1st Quarter, it will exceed 50% in 2nd Half. However, precondition of bunker oil price itself has climbed up sharply: for example, during this 1st Half it is prospected to jump by nearly 270 U.S. dollars compared to last 1st Half, and over 50% of that is not covered by the surcharge, causing the loss to expand even within the 1st Half.
As to the 2nd Half, we set premises for bunker oil price at 750 U.S. dollars per ton, around 290 dollars up from the same term last year. Though the covering ratio increased compared to this 1st Half, the loss is expected to grow because price up amount is large.
Furthermore, in year-on-year comparison, when we consider factors that are a part of variable expenses, especially railroad rates in North America, are scheduled to rise in the 2nd Half, the loss for the period is still increased.
Q4:     How is the price of railway charges in North America? Is there any new point?
A4:     Although base rate of railway charges remains unchanged, bunker surcharge will increase due to oil price hike. Of course oil price hike has substantial effect on operating cost of our vessels, as well as on railway and trucking charges, so oil price hike greatly affects total transportation cost.
Q5:     How much supply of tonnage is planned in Asia – North America route and Asia – Europe route in this year? Does this have flexibility to some degree?
A5:     We do not have any expansion plans for North America in this year. As usual we are planning to reduce sailings in winter slack season.
Total of 8 newly-built 8,000 TEU-type ships will be delivered in our Asia - Europe trade by next year following 4 x 8,000 TEU-type ships by Yang Ming and another 4 x 8,000 TEU-type ships by "K" Line. So space for Europe is totally increasing. We are seriously considering whether we should reduce space in future. As of now, we do not have any concrete plan; however, there is possibility of review of shipping patterns if needed, for example, reduce space of Asia to Mediterranean region.
Q6:     Please advise your view for average freight rate trend for both Asia-Europe and Asia-North America trades during this year?
A6:     We have projected freight rate for dominant leg in Asia-North America trades for this Fiscal year at about 10% up from last year, and 18% for the return leg, inclusive of fuel surcharge, on an average.
For Asia-North Europe (inc. U.K., Germany, France) trades, around 2% for dominant, and 19 percent for the return, respectively.
(Other Marine Business)
Dry Bulk
Q:     Please let us know the background of prospect for Dry Bulk market because it is felt the US$160,000/day for Cape size that you set as pre-condition is too high.
A:     US$160,000/day that we put for Cape size is a bit higher than US$155,000 which is the mean value at the market level of present Transpacific (Pacific Ocean Area) and Trans-Atlantic (Atlantic Ocean Area).
So far China, especially Steel Manufacturing Industry, has pulled the market but demand is comparatively weak at present because current situation indicates overflow of iron ore inventory in China as they rushed to import due to worries about iron ore price hike.
It is expected that demand for iron ore will recover after the Olympics. Even though present market level is thought to have hit bottom, current rate level is historically very high.
As a conclusion, we think it will be higher in the future, and that is the reason why we put US$160,000/day for prediction after 2nd quarter.
(Note: We explained the market for Cape size on assumption in the Pacific round but this time we use mean value of Pacific round and Trans-Atlantic round for latter six months of the term. Generally Trans-Atlantic market is US$30,000 higher than Pacific Ocean Area.)
Situation for small and medium size type ships is also similar. This market is pulled by Cape size. So if the Case size market goes upwards, small and medium size market follows. For the above reasons we think US$160,000/day for Cape size is moderate.
LNG New Business
Q:     Although it is a bit far from result of 1st quarter, what idea do you have about future business plan of LNG new business of Flex LNG?
A:     This is not decided by our own discretion because it is related to what Flex LNG will do. At this stage Flex LNG signed the contract for building 4 ships with Samsung Heavy Industries. Therefs huge potential of making profit in Flex LNGfs business model because it makes possible to commercialize small and medium natural gas fields which cannot be developed using conventional LNG technology due to insufficient scale.
We think there are many chances for profit-earning opportunities because of the business concerned with total LNG business such as upstream of LNG development, offshore LNG production and sales of LNG.
Heavy Lift Shipping Business
Q:     How much earnings does Heavy Lift Shipping Business roughly contribute as of the present?
A:     As to present business scale of our Heavy Lift Shipping Business, Operating Revenue is 30 billion yen and Ordinary Income is 2 billion yen. We hope this business will expand and earn Operating Revenue of 50 billion yen and Ordinary Income of 5 billion yen in the future.