Weak demand centered on domestic vessels and tankers

「In the domestic shipping industry, our main market, vessel prices remain high, but replacement construction is progressing steadily as freight rates and charter rates gradually improve. However, shipyards are finding it difficult to increase their annual construction capacity due to labour shortages. As a result, many shipowners have begun reserving berths after taking the age of their company-owned vessels into account, and some shipyards now have berths fully booked 5 or 6 years ahead.」

「In the domestic shipping industry, our main market, vessel prices remain high. However, the shortage of seafarers and pronounced ageing of vessels have led major operators to improve charter rates in order to maintain and secure transport capacity. In response, many shipowners have begun reserving berths for replacement construction, and some shipyards have begun scheduling berths several years ahead.」

「In the domestic shipping industry, our main market, the shortage of seafarers and pronounced ageing of vessels have led major operators to improve charter rates in order to maintain and secure transport capacity. Although vessel prices remain high, the number of inquiries is trending upward, and some shipyards have begun scheduling berths several years ahead.」

「In the domestic shipping industry, our main market, the shortage of seafarers and pronounced ageing of vessels have led major operators to improve charter rates in order to maintain and secure transport capacity. Although vessel prices remain high, the number of inquiries is trending upward.」

「In the domestic shipping industry, our main market, charter rates have been improving gradually and the need to address ageing vessels has become pressing. However, vessel prices remain high due to rising steel and other equipment costs, while the shortage of seafarers is also having a significant impact, and the pace of new-vessel orders has not picked up. Against this backdrop, steady progress toward replacement construction has emerged, particularly among operators and leading shipowners.」

「In the domestic shipping industry, our main market, charter rates have been improving gradually, but vessel prices remain high and the number of vessels under construction remains stagnant. However, shipowners are increasingly being compelled to address ageing vessels, and positive moves toward construction have emerged, particularly among operators with company-owned vessels and shipowners with multiple vessels.」

「In the domestic shipping industry, our main market, charter rates have been improving gradually, but vessel prices continue to rise due to higher costs for various materials, and the number of vessels under construction remains stagnant. However, second-hand vessels (vessels being replaced) are also trading at high prices, and positive moves have emerged, particularly among shipowners with multiple vessels.」

「In the domestic shipping industry, our main market, charter rates have been improving gradually, but vessel prices continue to rise due to higher costs for various materials, and the number of vessels under construction remains stagnant. However, second-hand vessels (vessels being replaced) are also trading at high prices, and positive moves have emerged, particularly among shipowners with multiple vessels.」

「In the domestic shipping industry, our main market, vessel prices have remained high due to continued increases in steel prices, and the number of vessels under construction remains stagnant. However, charter rates have been improving gradually, and second-hand vessels (vessels being replaced) are also trading at high prices, resulting in positive moves, particularly among leading shipowners with multiple vessels.」

「In the domestic shipping industry, our main market, the sharp rise in steel prices has led to a substantial increase in vessel prices, creating a situation in which vessel prices and charter rates do not match in many projects, and the number of vessels under construction remains stagnant.」

「In the domestic shipping industry, our main market, the sharp rise in steel prices has led to a substantial increase in vessel prices, leaving vessel prices and charter rates mismatched in many projects and keeping the number of vessels under construction from increasing.」

「In the domestic shipping industry, our main market, expectations had been for growth in new-vessel construction following the end of the Provisional Measures Programme for Domestic Shipping, which eliminated construction levies. However, higher vessel prices due to the surge in steel prices, the consolidation of steel mills and efforts in the tanker sector to assess the energy transition have kept the number of vessels under construction from increasing.」

「In the domestic shipping industry, our main market, expectations had been for growth in new-vessel construction following the end of the Provisional Measures Programme for Domestic Shipping, which eliminated construction levies. However, higher vessel prices due to the surge in steel prices, the consolidation of steel mills and efforts by tanker operators to assess the outlook for the energy transition have become major factors holding back negotiations for new vessels, and the number of inquiries has not increased to date.」

「In the domestic shipping industry, our main market, the Provisional Measures Programme for Domestic Shipping, which began in 1998, ended on 31 August 2021, after which vessel construction became unrestricted. In addition, overall cargo movements had recovered to pre-pandemic levels, prompting strong expectations for a revival in shipbuilding. However, the surge in steel prices and the resulting increase in vessel prices became a major factor holding back negotiations for new vessels, and the number of inquiries has not increased to date.」

「The domestic shipping industry, our main market, had been significantly affected by the Alternative Vessel Construction Scheme (Provisional Measures Programme), which began in 2016. It has been confirmed that the scheme will end in August 2021, following the May application round, which received applications for 19 vessels. Meanwhile, investment in vessels for domestic shipping, including tankers, remains weak due to rising labour costs, a shortage of seafarers and the government's policy of reducing fossil-fuel consumption. However, maritime transport of steel products, for which demand had declined, is showing signs of recovery for the automotive and public-works sectors, and this is expected to support replacement construction of ageing vessels.」

「In the domestic shipping industry, the company’s main market, new orders for domestic vessels had been virtually nonexistent through September, when construction levy payments would no longer be required, after the end of the Replacement Construction System (Temporary Measures Program), which began in 2016, was confirmed for September 2020. New orders have gradually recovered since September. In addition, a favorable environment continues in response to expectations for the Osaka-Kansai Expo, various infrastructure development projects, and reconstruction projects following natural disasters. However, shipbuilding investment across the domestic vessel industry remains weak because of higher labor costs and a shortage of seafarers.」

「In domestic shipping, the sluggish maritime transport of steel products, the main cargo for cargo vessels, caused average charter rates to decline 20% in the first half, a drop that could be described as the “largest since the end of World War II.” However, as demand for steel products for automobiles recovered and steelmakers restarted blast furnaces that had been idled from August through September, maritime transport volumes of steel products gradually increased and reached the year-earlier monthly level for the first time in approximately 7 months, bringing some signs of improvement. However, the risk has not been eliminated because steel demand depends on the automotive industry. As a result, domestic shipyards appear to have continued to receive few inquiries, with order backlogs remaining below 1 year.」

「As a measure to address the economic downturn caused by COVID-19, steelmakers suspended some blast furnaces. Domestic shipping market conditions consequently remained characterized by lower maritime transport demand and excess vessel capacity, and charter rates fell 20% in 6 months. Although the company had expected demand for new vessel construction to be stimulated by the end of the Replacement Construction System (Temporary Measures Program) in September 2020 and the transition to a system allowing construction without levy payments, most of the 26 vessels for which construction applications were submitted in September were projects for which construction had already been confirmed. New inquiries are unlikely to lead to orders until cargo movement returns to normal. On the other hand, steelmakers announced plans to restart blast furnaces that had been idled from August through September, raising expectations for a recovery in maritime transport demand, but the company believes considerable time will be required before this leads to inquiries at shipyards.」

「The impact of COVID-19 also compounded the situation. In domestic shipping, maritime transport of steel products, the main cargo for cargo vessels, declined, creating excess vessel capacity. Steel operators adopted self-help measures by dividing vessels under their control into several groups and carrying out joint lay-ups in rotation. As a result, activity in new vessel construction slowed significantly, and the order backlog at domestic shipyards declined. The company had expected demand for new vessel construction to be stimulated by the end of the Replacement Construction System (Temporary Measures Program) in September 2020 and the transition to a system allowing construction without levy payments, but new inquiries are unlikely to lead to orders until cargo movement returns to normal.」

「The company had expected cargo movement to increase in the domestic shipping industry, its main market, on the back of the Osaka-Kansai Expo and various infrastructure development projects. However, cargo movement declined from autumn through year-end, and the market failed to gain momentum as the steel industry, a major shipper, began reorganizing production bases and suspending inefficient facilities. Although there is willingness to build replacement vessels for the company’s core 499G/T cargo vessels, the Replacement Construction System (Temporary Measures Program), which began in fiscal 2016, is approaching its end, making it difficult to decide on domestic vessel construction.」

「A favorable environment continues in the domestic shipping industry, the company’s main market, supported by expectations for the Osaka-Kansai Expo, various infrastructure development projects, and reconstruction projects following natural disasters. However, shipbuilding investment remains weak because of higher labor costs and a shortage of seafarers. Although there is willingness to build replacement vessels for the company’s core 499G/T cargo vessels, the Replacement Construction System (Temporary Measures Program), which began in fiscal 2016, is approaching its end, and it is considered difficult to decide on new vessel construction.」

「On the other hand, future investment in shipbuilding remains weak because of higher labor costs and shortages of seafarers, and the number of applications for scheduled construction and other projects submitted to the Japan Federation of Coastal Shipping Associations has stagnated. Although there is willingness to build replacement vessels for the company’s core 499G/T cargo vessels, the Replacement Construction System (Temporary Measures Program), which began in fiscal 2016, is approaching its end. It is considered difficult to decide whether to wait until unrestricted construction becomes possible or to build under the system in anticipation of higher vessel prices resulting from a construction boom afterward, and inquiries for new vessels are trending downward.」

「A favorable environment continues in the domestic shipping industry, the company’s main market, supported by construction demand for the Olympics, expectations for the Osaka-Kansai Expo, and the acceleration of various infrastructure development projects. However, future investment in shipbuilding remains weak because of higher labor costs and other factors. The number of applications for scheduled construction and other projects submitted to the Japan Federation of Coastal Shipping Associations in fiscal 2018 barely exceeded 100 vessels, but was the lowest in the past 3 years. Although there is willingness to build replacement vessels for the company’s core 499G/T cargo vessels, uncertainty is increasing as the “Replacement Construction System (Temporary Measures Program)” that began in fiscal 2016 approaches its end. In the tanker industry, replacement construction of small chemical tankers and LPG vessels is expected, but order recovery is likely to take time because forecast declines in transport volumes resulting from lower oil demand and other factors remain a drag.」

「A favorable environment continues in the domestic shipping industry, the company’s main market, supported by construction demand for the Olympics, expectations for the Osaka-Kansai Expo, and the acceleration of various infrastructure development projects. However, future investment in shipbuilding remains weak because of higher labor costs and other factors. Although the number of applications for scheduled construction and other projects submitted to the Japan Federation of Coastal Shipping Associations in fiscal 2018 barely exceeded 100 vessels, it was the lowest in the past 3 years. Although there is willingness to build replacement vessels for the company’s core 499G/T cargo vessels, order recovery has yet to begin. Similarly, replacement construction of small chemical tankers and LPG vessels is expected in the tanker industry, but order recovery is expected to take some time because forecast declines in transport volumes resulting from lower oil demand and other factors remain a drag.」

「After emerging from a temporary trough in chemical and dry bulk market conditions, the shipping market has generally maintained a moderate recovery trend. The domestic shipping industry is considered to be in a favorable environment as construction demand for the Olympics and various infrastructure development projects gather pace. On the other hand, business sentiment has remained flat because of higher labor costs resulting from labor shortages, and future investment in shipbuilding has yet to show strength. Although willingness to build replacement vessels has emerged for the company’s core 499G/T cargo vessels, order recovery and expansion have yet to begin. Similarly, replacement construction of small chemical tankers and LPG vessels is expected in the tanker industry, but order expansion is expected to take some time because forecast declines in transport volumes resulting from lower oil demand and other factors remain a drag.」

「The domestic shipping industry is considered to be in a favorable environment as construction demand for the Olympics and various infrastructure development projects gather pace. However, cautious decisions are required because public investment is expected to remain weak for the time being, even after factoring in reconstruction demand following natural disasters. Although willingness to build replacement vessels has emerged for the company’s core 499G/T cargo vessels, order recovery and expansion have yet to begin. Similarly, replacement construction of small chemical tankers and LPG vessels is expected in the tanker industry, but order expansion is expected to take some time as transport volumes are forecast to decline because of lower oil demand and other factors.」

「The shipping and shipbuilding industries in which the company operates have emerged from a temporary trough in chemical and dry bulk market conditions and are generally recovering. In particular, in the domestic shipping industry, efforts are being made to fill production schedules from fiscal 2021 onward in addition to orders through 2020, in response to steel-related cargo movement supported by construction demand for the Olympics. Although the company remains cautious about new vessel construction for its core 499G/T cargo vessels from fiscal 2020 onward, when Olympic demand is expected to end, demand for replacement vessels is emerging. In the tanker industry, transport volumes are expected to decline alongside oil refiner consolidation resulting from lower oil demand, but replacement construction is expected for small chemical tankers reaching replacement age, as with cargo vessels, and particularly for LPG vessels. Overseas, although the outlook for new vessel construction is uncertain, replacement construction projects for chemical tankers and fishing vessels are increasing, mainly in Southeast Asia.」

「Although the company remains cautious about new vessel construction from fiscal 2020 onward, when Olympic demand is expected to end, construction approvals for replacement vessels are beginning to be issued. In the tanker industry, transport volumes are expected to decline because of oil refiner consolidation and other factors, but replacement construction is expected for small chemical tankers and LPG vessels reaching replacement age.」

「In the domestic shipping industry, cargo movement, particularly steel-related cargo, is increasing, but it is supported by construction demand for the Olympics and is insufficient to support a prolonged economic recovery. The domestic shipbuilding industry has secured orders through around early 2019 and is currently pursuing negotiations to fill its production schedule for the second half of fiscal 2019. Although steel-related cargo movement for the company’s core 499G/T cargo vessels is increasing, the company forecasts renewed deterioration from fiscal 2020 onward, after Olympic demand ends, and remains cautious about new vessel construction plans. In the tanker industry, transport volumes are expected to decline because of oil refiner consolidation and other factors, but replacement construction of aging vessels, primarily small chemical tankers and LPG vessels, is expected.」

「In the domestic shipping industry, cargo movement, particularly steel-related cargo, is increasing, but it is supported by construction demand for the Olympics and is insufficient to support a prolonged economic recovery. The domestic shipbuilding industry has secured orders through around the end of 2018 and is currently pursuing negotiations to fill its production schedule for fiscal 2019. Although steel-related cargo movement for the company’s core 499G/T cargo vessels is increasing, the company forecasts renewed deterioration from fiscal 2020 onward, after Olympic demand ends, and remains cautious about new vessel construction plans. In the tanker industry, transport volumes are expected to decline because of oil refiner consolidation and other factors, but replacement construction of aging vessels, primarily small chemical tankers, is expected.」

「In the domestic shipping industry, cargo movement, particularly steel-related cargo, is increasing, and some are anticipating a full-scale economic recovery. However, the increase is supported by construction demand for the Olympics and is insufficient to support a prolonged economic recovery. Although cargo movement of steel, the principal cargo carried by the company’s core 499G/T cargo vessels, is increasing, the company expects it to deteriorate again in fiscal 2019, when Olympic demand ends, and is taking a cautious stance toward new vessel construction plans. In the tanker industry, transfers between trading companies have fallen sharply because of the impact of oil refiner mergers, and replacement construction is limited, mainly to small chemical tankers.」

「Although it remains difficult to see signs of a full-scale recovery in the domestic shipping industry, cargo movement is holding steady or increasing slightly, and a full-scale economic recovery is eagerly awaited. The domestic shipbuilding industry has secured orders through around mid-2018 and is currently pursuing negotiations to fill its production schedule from the second half of 2018 through fiscal 2019. Cargo movement for steel, the principal cargo carried by the company’s core 499G/T cargo vessels, shows signs of recovery, and replacement construction of aging vessels has begun to move forward in some areas, albeit gradually. In the tanker industry, despite oil refiner merger issues, approvals for replacement construction of aging vessels, primarily small chemical tankers, have begun to be issued.」

「Although cargo movement for steel, the principal cargo carried by the company’s core 499G/T cargo vessels, remains weak, signs of recovery have emerged in some areas, and replacement construction for aging vessels has begun to move forward. In the tanker industry, despite oil refiner consolidation and merger issues, approvals for replacement construction of aging vessels have also begun to be issued.」

「Cargo movement for the company’s core 499G/T cargo vessels remains weak. Some operators have reportedly cut charter rates by 3～5%, and construction approvals remain difficult to obtain even for vessels reaching replacement age. Construction plans in the domestic tanker industry also remain stalled because of oil refiner consolidation and merger issues.」

「The market for the company’s core domestic 499G/T cargo vessels remains weak, with poor cargo movement and sluggish market conditions. Amid reports that some major operators have reduced charter rates, construction approvals remain difficult to obtain even for vessels reaching replacement age. Construction plans in the domestic tanker industry also remain stalled because of oil refiner consolidation and merger issues.」

「The market for the company’s core domestic 499G/T cargo vessels remains weak, with poor cargo movement and deteriorating market conditions. Even for vessels reaching replacement age, owners and operators are reluctant to approve construction. In the domestic tanker industry, construction plans have also stalled as a result of the impact of oil refiner consolidation plans.」