MOL Outlines New Single-Year Fleet Strategy

MOL President and CEO Junichiro Ikeda.

By MarEx 2016-08-01 05:00:44

Mitsui O.S.K. Lines (MOL) published its Annual Report 2016 on July 29 outlining an acceleration towards its 2020 vision that will see significant change to the company within a year.
The Annual Report 2016, under the title of Reinvent, explains the MOL Group's management strategies for dealing with the continuing severe market environment including an outline of the single-year management plan that the entire group is going all-out to achieve. 

The company’s three-year medium-term management plan Steer For 2020 began in April 2014 and involved three initiatives MOL needs to advance: Innovation of Business Portfolio, Innovation of Business Model, and Innovation of Business Domain. 

“In regard to the first two innovations, we were able to achieve major accomplishments as evidenced by the securing of long-term contracts in LNG carriers and offshore businesses,” MOL President and CEO Junichiro Ikeda said. “We have also made steady progress with Innovation of Business Domain, where we began various initiatives, including strengthening the logistics and terminal businesses. However, with significant shifts in trade and the global economy, it is essential that we accelerate these initiatives.”

Despite these shifts, he says, the group’s overall strategy remains sound and centers on successfully carrying out the three innovations outlined in Steer for 2020. “This alone, however, is no longer sufficient,” says Ikeda.

“Historically low market conditions for dry bulkers and container ships have forced us to make large revisions to the profit and financial targets of the medium-term management plan. We are still headed in the right direction over the medium- to long-term, but short-term earnings for the period have diverged greatly from the plan’s targets, making it virtually impossible to achieve the plan’s final targets.

“Foremost, what we aim for in this single-year plan is the successful implementation of the Business Structural Reforms. In regard to quickly redelivering surplus vessels, we will continue to negotiate and reach agreements with chartered vessel owners and other relevant parties. In the dry bulker business, we will greatly reduce the number of vessels vulnerable to the market exposure of free vessel operations while focusing management resources on business with long-term, stable customers and bringing about a shift toward sustainable businesses.

“In container ships, we will steadily reduce surplus vessels and further promote rationalization of unprofitable routes. In addition, we will revitalize the sales capabilities lost from past excessive cost reductions and fully reassess MOL’s yield management, which controls the container imbalance in round-trip voyages.”

The report is available here.