Nippon Yusen K.K. and Kawasaki Kisen Kaisha Ltd., Japan's largest and third-largest shipping lines, forecast full-year losses Monday as the recession slashes U.S. and European demand for container freight.
Nippon Yusen expects its first unprofitable year in 23 years, forecasting a loss of ¥5 billion compared with an earlier net income forecast of ¥18 billion. K-Line, as Kawasaki Kisen is known, forecast a loss of ¥31 billion compared with an earlier profit prediction of ¥6.5 billion.
The recession has choked demand for furniture, building materials and consumer electronics in the U.S. and Europe, driving down shipping rates. Nippon Yusen has slashed its fleet expansion by 15 percent and laid up containerships this year to stem declines in shipping rates as demand slumps.
"It's tough all round for the shipping lines," said Osuke Itazaki, an analyst in Tokyo at Credit Suisse Group. "The container segment is suffering and even though the dry-bulk market is rebounding, it's still below last year's levels."
Mitsui O.S.K Lines Ltd., operator of the world's largest merchant fleet, lowered its profit forecast by 25 percent to ¥30 billion. It also cut its operating profit forecast to ¥50 billion from ¥80 billion.
The company posted a first-quarter loss of ¥13 billion as sales fell 41 percent to ¥297 billion hurt by falling shipping rates and demand for freighters.