NYK slashes fleet expansion

Nippon Yusen K.K. (NYK), Japan?s largest shipping line, will slash fleet expansion plans by 10% as it scraps some ships and returns others to owners amid slumping demand for transporting cars and containers. NYK currently has 776 vessels and will expand its fleet to about 850 ships by the end of March 2011, compared with an earlier plan of 940 ships.

Japan exported 64% fewer vehicles in February, the biggest drop since the Japan Automobile Manufacturers Association began keeping figures in 1973, as Toyota Motor Corp. and Honda Motor Co. slashed production. NYK last month said net income probably fell to 14 billion yen ($140 million) for the year ended 31 March after a record profit of 114 billion yen for the previous fiscal year.

NYK will cut planned capital spending by at least 10% over the three years to March 2011. The company had planned to spend about 1.37 trillion yen on new vessels and, although the shipping line will not cancel existing orders, the savings will come from orders that have not been placed. The company plans to reduce container ship capacity by 10% as early as this month, through a combination of laying up and scrapping ships.

About eight container vessels so far have been mothballed and the company is laying up about 20 container ships including vessels where the crew have been removed and ones where a crew is still on board while the vessel is in dock.