Autos boost Nippon Yusen

Shipping line to transport more cars in 2012 than in last five years

Bloomberg

Nippon Yusen K.K., Japan’s largest shipping line, expects its car-carrying vessels to transport more vehicles in fiscal 2012 than it has in five years as demand surges in North America and factories in Thailand recover from last year’s floods.

Auto shipments will probably rise to 3.5 million in the business year started April 1, Executive Vice President Masahiro Kato said Monday in Tokyo. The company had predicted shipments would reach 2.87 million last fiscal year.

“The market in America is extremely strong,” Kato said. That is “making up for the drop in Europe.”

U.S. car imports are expanding at their fastest pace since 2006, according to data compiled by Kevin Tynan, a Bloomberg Industries auto analyst, because of economic growth and the rebound in Thai production.

The jump, along with rising demand for liquefied natural gas and a rebound in container rates, may help Nippon Yusen return to profit this year, according to analyst estimates compiled by Bloomberg.

Thai vehicle exports will probably surge to 1 million this fiscal year from about 750,000 last year, Kato said, as automakers, including Toyota Motor Corp., restore production following Thailand’s worst floods in almost 70 years.

Nippon Yusen is set to open a car terminal in India because of rising exports, Kato said. Overseas sales of cars from India rose 14 percent in the year ended March 31, according to Society of Indian Automobile Manufacturers.

U.S. sales of cars and light trucks rose 13 percent in March, sending the industry to the best quarterly pace since 2008, according to researcher Autodata Corp. The European Union’s car sales dropped to a 14-year low last month as the region’s sovereign-debt crisis dampened demand.

The shipping line operated 100 car carriers, each capable of carrying 2,000 cars or more, as of Jan. 1, 2011, according to figures from the company. Nippon Yusen had a total fleet of 827 ships, also including vessels used to carry LNG, oil, commodities and containers, as of March 2011.

The company plans to accelerate expansion in its LNG tanker fleet as Japan imports more of the fuel and reduces its use of atomic power following The March 11 earthquake, tsunami and subsequent nuclear crisis, Kato said. The change means the company will have 100 vessels, including jointly owned ones, before a previously planned 2020 target, he said.

“There’s been a big change since the disaster,” Kato said. “I expect lots more contracts to be signed.” He didn’t elaborate on the plans for the LNG fleet, which stands at about 70.

Domestic power providers used record amounts of LNG last year to replace nuclear generation. The 10 regional power utilities used 52.9 million metric tons of LNG in the fiscal year ended in March, up 27 percent from the prior year, according to April 16 data from the Federation of Electric Power Companies.

Some of Nippon Yusen’s car carriers have been slowed to as little as 12 knots from 20 knots to cut fuel costs by more than half, Kato said. The price of 380 Centistoke marine bunker fuel, used by ships, traded at $715 a ton in Singapore on Tuesday. It surged to $745 on Feb. 9, the most since July 2008.

In January, Nippon Yusen predicted a loss of ¥26 billion for the last fiscal year, compared with an earlier forecast of ¥18 billion. It is due to announce earnings April 27.

The shipping line may post a ¥13.7 billion profit this fiscal year, according to the average of 16 analyst estimates.