"K" Line Sues APL Logistics, Alleging Libel

On Thursday, Kawasaki Kisen Kaisha ("K" Line) filed a lawsuit in a Tokyo court against APL Logistics, seeking compensation for alleged "acts of disseminating false information." The carrier alleged that APL Logistics employees had advised their clients to terminate bookings on fears that “K” Line might go bankrupt. 

"[We have] suffered considerable damage due to cancelations or suspensions of bookings by clients," the line said in a statement. “’K’ Line has decided to file a lawsuit in order to restore its social confidence and clarify the social responsibility of a company such as [APL Logistics]."

In late September, APL Logistics issued a statement indicating that the alleged statements would be retracted. “On or around 20 to 21 September 2016, a small number of APL Logistics Group employees conveyed opinions to several customers that touch on the potential financial position or viability of ‘K’ Line. These employees have since retracted their statements or are in the process of doing so,” said APL Logistics President Beat Simon.

While "K" Line emphasized Thursday that it will “continue to respond to customer demand and provide reliable and high-quality services,” its recent investor announcements suggest that it is incurring deep losses due to the ongoing downturn in shipping. At the end of October it projected a loss of $800 million for the twelve months ending in March 2017, and it predicted that there would be no annual dividend, citing an "urgent management priority to improve our fiscal strength in light of the forecast of a loss."

In response to the downturn, “K” Line says that it has reduced expenses to offset declining revenue, and it has worked in partnership with the Japanese government and with competitors to improve its position. On October 31, "K" Line and compatriots MOL and NYK merged their container operations, seeking increased scale to compete with larger shipping firms. The carriers have also secured favorable changes to Japanese tax laws on depreciation, subsidies and tonnage tax, all of which will bolster their bottom lines. 

After the collapse of Hanjin Shipping in late August, shippers have become increasingly cautious about carriers' financial health, according to leading carrier Maersk Line. Hanjin's bankruptcy left $14 billion worth of cargo stranded on its ships for weeks, an experience that shippers are not keen to repeat. 

[Note: APL Logistics was purchased last year by Kintetsu World Express, and is no longer related to Neptune Orient Lines' APL division.]