Mega fleet expansion for Japanese shipping

Japanese shipping companies plan to invest over $34 billion to increase their fleets by 630 vessels in the next five years. The vessels to be acquired in the fleet expansion programmes that will end by 2010 will be mostly LNG tankers.

Sources close to the Japanese shipping industry disclosed that the shipping firms are envisaging a fleet expansion of 40% for the period under consideration. With this capacity extension, Japan’s shipping companies primarily want to be prepared for the growing trade between the important economic powers such as Russia, Brazil, India and China.

In the tanker sector, the Japanese are reacting to the growing number of energy development projects in Nigeria, Middle East, Central and South America. It is also envisaged that the newbuilding programme will be aimed at the rapidly rising spot markets.

The leading Japanese shipping companies involved in the fleet expansion programme includes the largest, Nippon Yusen Kaisha (NYK), which plans to spend over $9 billion in expanding its fleet. Others are Mitsui OSK, the second largest shipping company in Japan, which has a budget of over $10 billion for its fleet expansion programme, while “K” line is spending about $7 billion in the modernisation of its fleet by the year 2009.

These expansion programmes will be the largest in the history of Japan.

According to industry sources, the world-wide containership fleet will grow by more than 11% this year while that of crude oil tankers and bulk freighters will increase by 10% and 7% respectively. Much of this increase is the result of China?s economic growth which, according to the latest projections, will increase its share of bulk freight traffic from 19% to 24% by 2008, its share of container traffic from 22% to 25% and tanker traffic from 7% to 12%.

NYK has already placed an order for eight of the world’s largest container vessels to be delivered by 2007.