NYK president Hitoshi Nagasawa marked the 137th anniversary of NYK’s founding.
October 1 is the 137th anniversary of NYK’s founding, and it is a great pleasure for me to celebrate this day with you by paying tribute to our predecessors’ achievements.
The NYK Group recorded record profits last fiscal year, and we expect to continue to perform well in the current fiscal year. It is all because of the efforts of NYK Group staff members, including our seafarers, truck drivers, and aircraft pilots, all of whom have worked extremely hard in light of the COVID-19 pandemic. I want to thank all of you again for your contributions.
Let me explain the status of each business.
In the liner & logistics business, Ocean Network Express continues to perform extremely well. This is due to the widening supply-demand gap caused by the COVID-19 stay-at-home demand and logistics blockage, which has resulted in unprecedented freight rate levels since the year before last. Despite the difficulties in merging the container divisions of Japan’s three major shipping lines, we have achieved solid results over a short term, contributing significantly to the NYK Group’s business performance.
Nippon Cargo Airlines, which operates the air cargo transportation business, had to ground all its aircrafts after the receipt of an official business improvement order in 2018. However, the company has since re-established a companywide safe operation system and is now operating well, gaining a significant profit thanks to favorable market conditions.
In the logistics business, 12 years has passed since Yusen Logistics (YLK) was established through the merger of Yusen Air & Sea Service and NYK Logistics Japan, and YLK is currently demonstrating the advantages of this merger. In addition to the forwarding business, the contract logistics business is also performing well. In this way, the liner & logistics business is driving the NYK Group as a whole.
In the bulk shipping business, the Automotive Transportation Division has been steadily increasing its performance through its efforts to remain “one step ahead.” The development of several LNG-fueled car carriers with an eye to the future is another example of this commitment.
The Dry Bulk Business Division has long suffered from over-investment and sluggish market conditions. However, in fiscal 2020, the division undertook structural reforms, including the disposal of high-cost vessels, and formulated a policy based on earnest discussions about the ideal form for the business. In addition to the effects of these reforms, the tailwind of recovering market conditions has led to a remarkable recovery in its business performance.
Finally, in the Energy Business Division, we are facing many challenges, including a prolonged slump in the market for very large crude oil carriers (VLCCs), soaring prices for petroleum product tankers due to the situations in Russia and Ukraine, and wild fluctuations in the market for LNG carriers. Under such circumstances, LNG carriers and LPG tankers have been performing stably. Since energy is essential to people’s lives, the NYK Group needs to closely monitor and respond to future trends in reducing the use of fossil fuels and expanding the use of renewable energy sources.
The cruise ship and travel-related businesses have been struggling due to the significant impact of COVID-19. However, everyone involved is doing their best, and the business environment is finally improving gradually, so I hope that they will continue to work hard. On the other hand, in business areas such as coastal shipping and ports, each group company is performing well under such circumstances.
This excellent performance could not have been achieved by the sales division alone. We must also recognize the corporate divisions that support it, such as the Management Planning Headquarters, the General Affairs Headquarters, and the Technical Headquarters.
We have also steadily implemented measures for the next generation. Of course, the results have yet to come in. Still, we can look forward to commercializing such projects as the offshore wind power generation business, fully autonomous ship systems, ammonia-fueled vessels, liquefied CO2 carriers, and the use of simulator technology in the maritime industry. We may face many hurdles to realizing these businesses, but I strongly hope the people in charge will have the spirit of challenge to overcome and move forward with their commercialization.
This year is the final year of our medium-term plan “Staying Ahead 2022.” Thanks in part to the favorable turn of the business environment, we have almost achieved the goals of this medium-term plan and are now working on the formulation of the medium-term plan starting from the next fiscal year. The period covered will be until around 2030. In line with our basic philosophy of “Bringing value to life,” we would like to further advance ESG management. Last year, young executive officers discussed looking ahead to the year 2050, so we want to incorporate the ideas from that discussion to formulate the medium-term management plan.
The first key point is how much we can reduce greenhouse gas (GHG) emissions. The NYK Group currently emits about 17 million tons of GHGs per year. We are heavily responsible for these emissions and will eventually have to bear the costs, such as carbon taxes. In the future, I believe society and customers will choose companies that earnestly work to reduce GHG emissions. Thus, such efforts can be a growth strategy.
The second is to strengthen governance. Transparent decision-making and thorough compliance measures remain critical. Our group has performed exceptionally well for the past two to three years, with no major scandals. The fact shows that strengthening governance is extremely important.
The third is to create a system and environment in which our Group staff can work with a high level of awareness and spontaneity in terms of human rights, gender, work style, and workplace environment.
The basic premise of these activities is to ensure safe operations by sea, land, and air. As I have repeatedly stated, we place safety as the top priority for our ESG management as a comprehensive global logistics enterprise.
With the above framework, we will incorporate specific investment, profit, business, and capital policies into the new medium-term plan. We will announce it in the spring of next year, so please pay close attention.
As reported in the news daily, our business environment is dramatically changing. What used to be a favorable wind may lose its momentum or turn into a headwind in the future. However, the management foundation of our group will not waver. So, please focus on carrying out what you need to accomplish. I would also like to reiterate that communication, both up and down, horizontally and diagonally, is vital to a good performance. Please communicate well with the people around you and achieve excellent work.
In closing, I would like to conclude my anniversary address by wishing all NYK Group vessels, trucks, and airplanes safe operations, and all NYK Group officers, staff, and their families healthy lives.