JAPAN's three largest ocean carriers NYK Line, MOL and "K" Line faced some uneven seas during their fiscal year 2017, which ended March 31.

The latest financial results are the last to be reported after the three firms officially joined their container shipping divisions, including worldwide terminal operations outside of Japan, to create a new operating company called the Ocean Network Express on April 1.

But despite each carrier reporting increases in top-line revenue for FY 2018, NYK and "K" Line turned a profit while MOL took heavy losses.

Although each reported rising container transport volumes, freight rate growth was limited by the introduction of additional vessel capacity as carriers received and deployed new containerships.

Faring the best of the former "Big 3" carriers, NYK recorded profits attributable to owners of the parent of JPY20.2 billion (US $97.7 million) for the 12 months ending March 31, a marked turnaround from a loss of JPY265.7 billion for the same period a year earlier.

NYK's liner trade segment posted a recurring profit of JPY10.8 billion, up from a loss of JPY12.7 billion, on revenues that surged 18 per cent to JPY691.4 billion compared with the previous year.

In the container shipping market, "shipping traffic was brisk along transpacific routes, but an upswing in spot freight rates largely came to a standstill due to the impact of growing shipping capacity, which was caused by the production of new ultra-large container ships," the firm said. "Shipping traffic picked up along European shipping routes and the balance between supply and demand improved in the first half of the fiscal year, but shipping traffic slowed down overall in the second half."

NYK is expecting this improved profitability to continue into the next fiscal year, projecting earnings attributable to the parent company of JPY29 billion for FY 2018 despite an expected 17.3 per cent drop in earnings from the liner segment reporting under the ONE joint venture.

Not far behind NYK, "K" Line recorded profits attributable to owners of the parent of JPY10.9 billion for the fiscal 2017 year, compared with a JPY139.5 billion loss for the prior 12-month period.

In its containership division, "K" Line recorded a segment profit of JPY3.4 billion, up from a loss of JPY31.5 billion in FY2016 on operating revenues that jumped 15.3 per cent to JPY598.5 billion.

"K" Line's overall container handling volumes were relatively flat compared with the previous year, with demand increases of 10 per cent on the Asia-Europe trade, 3 per cent on intra-Asia lanes and 2 per cent in the transpacific trade between Asia and North America. That growth was offset in part by an 8 per cent decline in north-south volumes.

"Although the supply-demand balance did not improve in earnest, freight rates continued to recover," the company said of the container shipping segment results. "Although freight rates were lower than the initially expected level, they were higher that the level in the previous year. Overall, the company's containership business recorded year-on-year growth in revenue, and its losses shrank despite recognising startup expenditure of integration of the three Japanese shipping companies' containership business."

Looking ahead to FY 2018, "K" Line is projecting a 32.6 per cent drop in profits to JPY7 billion on a 35.1 per cent decline in revenues to JPY754.5 billion due to the separation of its liner shipping segment.

The script was completely flipped for MOL, however, which posted a loss attributable to owners of the parent company of JPY47.4 billion for the 2018 fiscal year after managing to eke out a JPY5.3 million profit in FY 2016. MOL's revenues grew 9.8 per cent year over year to JPY1.65 trillion.

In its containership division, MOL narrowed its segment loss from 32.8 billion yen in FY 2017 to 10.6 billion yen during FY 2017 as segment revenues surged 20.7 percent to 751.6 billion yen.

The company said results were boosted by stable expansion in the global economy, with continued steady increases in personal and corporate spending in the United States, Europe, China and Japan.

"In the containership freight market, there were observable improvements in the supply and demand environment on Asia-North America, Asia-Europe and Asia-South America routes, which facilitated a recovery in the spot freight rates," MOL said. "In particular, on the Asia-East Coast of South America routes, cargo volumes recovered sharply as the Brazilian economy showed signs of pickup, and spot freight rates began sharply rising from the beginning of spring and stayed strong throughout the fiscal year."

For FY 2018, MOL expects a profit attributable to the owners of JPY30 billion on JPY1.13 trillion in revenues, a 31.6 per cent decline from FY 2017, reports American Shipper.