Shipowners set steady course

Japanese shipowners are finding the strong yen is preventing them gaining from the recovery in trade.

Figures just released from the Japanese Ministry of Transport do not paint too glowing a picture of the country?s shipping activities. Having hit 100 million deadweight in 1997, by mid-1988 the Japanese fleet had lost 51 vessels to stand at 1,970 ships totalling 99 million dwt, with an average age of 11.0 years.

In addition, the volume of trade has slackened by 1.4 per cent from the 720 million ton level of 1997, while the average income per ton for both dry and oil cargoes have remained the same for the last three years. The 12 ocean-going shipping companies listed on Tokyo?s stock exchange saw operating income decline by 1.1 per cent and profits down by 1.2 per cent as the yen has strengthened. Of the 12 companies, the top five saw income stable and profits edge slightly higher. Mid-year figures, to the end of September, show MOL and NYK have seen income increase by 8.0 and 1.3 per cent while K-line has suffered a 12.5 per cent decrease. To counteract this, all three have squeezed costs, and NYK?s operating profit increased by almost 60 per cent, MOL?s by around 29 per cent and K-Line by 13.7.

Japanese yards under pressure

Japanese shipbuilding is in one of those situations where the statistics are contradictory and do not match the situation in the yards.

Government figures show output from Japanese shipyards was 9.7 million gross in 1999 against 10.68 in 1998. However, figures from the Japanese Ship Exporters? Association (JSA) show increasing activity. Last year its members took 237 orders totalling 8.7 million gross against 144/7.2 million in 1998. Export deliveries were 140 (5.7 million gross) leaving the export orderbook at 427 (up from 351) with the gross almost two million higher at 20.2 million.

While the order situation looks good, last year Korean yards took orders for 227 ships totalling 12.7 million gross ? a 27.2 per cent increase over 1998. This demonstrates how hard Japanese shipbuilders are having to fight to win orders, even Japanese owners have placed orders in Korea. “Prices are the same for domestic and export newbuilding,” says JSA managing director, Mr Utsunomiya. Japanese shipowners have no advantage in placing orders domestically ? indeed the strength of the Yen amplifies any advantage of placing orders overseas.

There has been much talk about mergers between Japanese yards but this only makes sense if the result is increased competitive strength, he says.

“Each company has to think about how it can individually increase competitiveness,” he says.

Equipment manufactures face price pressures

As Japanese yards purchase most of their equipment from domestic suppliers, the high yen is causing double trouble.

Japanese equipment manufacturers have not escaped the financial pressures placed on the yards. As the main engine accounts for a high percentage of the building cost of low-technology vessels, reducing the price has become imperative if Japanese yards are to compete. Diesel United?s results graphically illustrate the problem. In 1992 its sales amounted to Y22 billion ($208 million) for 33 engines with a combined output of 590MW (803,000 bhp). In 2000 the company will build 42 engines totalling 522MW (711,000 bhp) but income will be under Y15 billion ($142 million). This represents a decrease of almost 23 per cent in $/kW in eight years.

To cope with this DU has been reorganising its engine building to reduce machining and assembly time. To measure the effect DU uses 6RTA48T – first produced in 1996, and the figures taken for building six units in 1997 is taken as the baseline. By 1999 the total cost had been reduced by 19 per cent with assembly time cut by 48 per cent, machining cost down 40 per cent and purchasing by 14 per cent. Cost reductions continue and DU is now looking world-wide for suppliers rather than just Japanese.

In Mitsubishi?s case the cost reduction efforts start with the engine design. It?s new engine, the UEC68LSE (see Propulsion News), is a good example, having around 25 per cent fewer parts than the existing LSII range. This not only reduces the manufacturing and building cost, but also increased reliability. The company has two engine plants; Kobe building large bore low-speed engines, and Yokohama building smaller bore two- strokes and four-stroke units. Kobe builds 84 and 58cm bore Sulzer engines under licence while Yokohama holds MAN B&W licences.

In past times the sales of Mitsubishi?s large turbo-chargers was limited to its own engine designs but in 1996 both Sulzer and MAN B&W approved the use of MET units on their low-speed engines. After that the sales of Mitsubishi?s turbo-charger has exceeded that for its engines, and by 1998 only half the large units were destined for Mitsubishi engines. The company has introduced a new larger sized turbo-charger to accommodate the larger airflow encountered in the super-bore engines, (see Propulsion News).

Around 10 per cent of the output is exported to Korea and Europe and have some notable references such as A P Moller which has 59 MET units in service or on order. Overhaul intervals are set at 25,000 hours. When the turbo-charger is fed by the engine lub oil system Mitsubishi recommends that the thrust bearings and thrust clearance are checked every 5,000 to 10,000 hours. Checking wear on the compressor side thrust bearing is done visually. The bearing has a tapered and a parallel section. As the bearing wears, the parallel section increases in length until both parts are equal at which point a replacement is needed.