Japanese transport giants NYK and "K" Line have raised their full-year profit forecasts on the back of Chinese demand for raw materials more than doubling first-quarter profits.
NYK anticipates a net income of JPY100 billion (US$830 million) for the year ending March 31 2008, compared with a previous forecast of JPY82 billion.
"K" Line announced it has increased its profit forecast to JPY71 billion, up from JPY63 billion buoyed by a stronger market, reported Bloomberg News.
This comes as demand in the United States and Europe for low-cost goods manufactured in Asia enabled shipping lines to increase freight rates this year.
"Last year was the bottom for the slump in container rates," said Yoshihisa Miyamoto, an analyst in Tokyo at Okasan Securities.
NYK's net income grew to JPY28.6 billion (US$237 million) in the three months ending in June, up from JPY12.4 billion a year ago. Sales rose 15 per cent to JPY601.4 billion. "K" Line's profit in the reporting period soared to JPY25.8 billion from JPY9.7 billion. Sales rose by 23 per cent to JPY309.2 billion, the report noted.
Another factor for the optimistic container shipping outlook is that iron ore imports from China have surged in the run up to the 2008 Beijing Olympics, with congestion reported at Newcastle in Australia, the world's busiest coal-export port. This has lead to a shortage of ships as vessels are forced to wait off the coast for as long as three weeks to dock.
Adding to the positive operational environment, Japanese shipping lines have signed long-term agreements to lock in higher container freight rates. NYK signed a 20-year contract in May to carry iron ore to China from Brazil for Vale do Rio Doce, the world's largest producer. MOL is said to have at least five long-term agreements with Baoshan Iron & Steel of China.
Chinese exports of toys, clothes and other goods increased by 27.5 per cent in the three months ended June, hotting up demand for container ships. The surge enabled "K" Line to implement rate hikes on shipments of 40-foot containers to North America from Asia by US$100 in April, the report added.
NYK anticipates a net income of JPY100 billion (US$830 million) for the year ending March 31 2008, compared with a previous forecast of JPY82 billion.
"K" Line announced it has increased its profit forecast to JPY71 billion, up from JPY63 billion buoyed by a stronger market, reported Bloomberg News.
This comes as demand in the United States and Europe for low-cost goods manufactured in Asia enabled shipping lines to increase freight rates this year.
"Last year was the bottom for the slump in container rates," said Yoshihisa Miyamoto, an analyst in Tokyo at Okasan Securities.
NYK's net income grew to JPY28.6 billion (US$237 million) in the three months ending in June, up from JPY12.4 billion a year ago. Sales rose 15 per cent to JPY601.4 billion. "K" Line's profit in the reporting period soared to JPY25.8 billion from JPY9.7 billion. Sales rose by 23 per cent to JPY309.2 billion, the report noted.
Another factor for the optimistic container shipping outlook is that iron ore imports from China have surged in the run up to the 2008 Beijing Olympics, with congestion reported at Newcastle in Australia, the world's busiest coal-export port. This has lead to a shortage of ships as vessels are forced to wait off the coast for as long as three weeks to dock.
Adding to the positive operational environment, Japanese shipping lines have signed long-term agreements to lock in higher container freight rates. NYK signed a 20-year contract in May to carry iron ore to China from Brazil for Vale do Rio Doce, the world's largest producer. MOL is said to have at least five long-term agreements with Baoshan Iron & Steel of China.
Chinese exports of toys, clothes and other goods increased by 27.5 per cent in the three months ended June, hotting up demand for container ships. The surge enabled "K" Line to implement rate hikes on shipments of 40-foot containers to North America from Asia by US$100 in April, the report added.