Co. Ltd. Comparison

Three major shipping companies in Japan(NYK, Mitsui O.S.K. Lines, “K” LINE)


This section compares the sales and business activities of the three major Japanese shipping companies.

The sales and profit scale of the three companies are as follows. Unit : millions of yen

  1. Nippon Yusen Kaisha(NYK)(日本郵船)
    <Tokyo, Prime Market (Code Number: 9101)>
    2280775(Net sales) 1009105(Net profit)
  2. Mitsui O.S.K. Lines, Ltd.(商船三井)
    <Tokyo, Prime Market (Code Number: 9104)>
    1269310(Net sales) 708819(Net profit)
  3. Kawasaki Kisen Kaisha, Ltd. (“K” LINE)(川崎汽船)
    <Tokyo, Prime Market (Code Number: 9107)>
    756983(Net sales) 642424(Net profit)


The business activities of NYK, Mitsui O.S.K. Lines, and “K” LINE are diverse, ranging not only from marine transportation by cargo ship, but also land transportation and air transportation.

Marine transportation

  • Liner (Container ship)
    Sailing on a set route and schedule. Carries groceries, daily necessities, home appliances, etc.
  • Bulk shipping
    The ship is chartered and sailed on a route and schedule tailored to each client's needs.
    • Dry Bulk Business
      Bulk cargoes such as iron ore, coal, wood chips, etc. (loaded in bulk without being packed)
    • Automobile export
    • Energy sector (crude oil, LNG, petroleum, etc.)
    • Ocean development

land transportation

  • Logistics
    Provides logistics services by truck and rail before and after being loaded onto cargo ships.

air transportation(※NYK)

  • NYK operates air transportation through its subsidiary Nippon Cargo Airlines Co. Ltd.

Features of Marine Transportation Business

One of the characteristics of the shipping business is that it is an industry that is highly susceptible to market (economic) conditions.

The graph below shows the change in the freight rate index (BDI) for dry bulk carriers.

Citation K LINE HP

We can see that freight rates for dry bulk carriers are rising in the second half of 2020 and into 2021. This can be attributed to the following three reasons caused by the Corona disaster.

  • Decrease in new container production
    90% of containers are produced in China, but new container manufacturing has decreased significantly due to the 2019 U.S.-China trade conflict and the reduction in factory capacity due to the Corona disaster
  • Shortage of port workers
  • Rapid increase in demand for cargo transport
    Rather high export volumes from China to Europe and North America due to increased demand for nest eggs

In addition to ,

  • Crude oil price (fuel for cargo ships)
  • Foreign exchange (settlements in the shipping industry are often in U.S. dollars)

The above factors will swing the performance of shipping companies for better or worse.

Freight rates for cargo vessels are classified as either stable freight rate business or non-stable freight rate business. The difference is that stable freight rate business is a medium- to long-term contract, while non-stable freight rate business is a short-term contract.

The left side of the chart below shows stable freight rate businesses, and the right side shows non-stable freight business.

Amid the shipping disruption caused by the Corona disaster, we see that businesses other than stable freight rate businesses, which tend to be short-term contracts, are earning large profits in 2020 and 2021.

Sales Ratio by Business Segment

Let's look at NYK's segment sales ratios.

SegmentSales ratioOrdinary Income Ratio
Air transport8%39%
Bulk shipping43%14%

NYK's airfreight segment has the second highest recurring profit margin after liner shipping.

Next is Mitsui O.S.K. Lines.

SegmentSales ratioOrdinary Income Ratio
Dry bulk carrier28%12%
Energy, Marine 23%7%
Car carriers, ferries, domestic RORO vessels19%4%

MOL has a high percentage of "energy and offshore business" and is strong in the fields of tankers, offshore, coal carriers, wind energy, and liquefied gas.

MOL also focuses on offshore development, with FPSO (Floating Production, Storage, and Offloading) and FSRU (Floating Storage and Regasification Unit for LNG), which are representative of MOL's offshore business, utilizing ships not for transportation but by floating them at specific locations. MOL is also actively investing in other non-shipping areas such as real estate.

Finally, let's take a look at "K" Line.

SegmentSales ratioOrdinary Income Ratio
Product Logistics50%163%
Dry bulk carrier37%9%
Energy resources12%5%

Liner shipping (containerships) accounts for more than 90% of the company's product logistics business.

All three companies have by far the highest profit margins in liner shipping. The liner trade business of the three companies is operated by ONE, an equity method affiliate established jointly by the three companies in April 2018. Amid a wave of industry restructuring, including the consolidation of major overseas shipping companies, the three former rivals are now operating their liner trade business under the ONE brand in order to ensure competitiveness through economies of scale.

The percentage of the liner(container ship) business of the three companies to total net sales is as follows: "K" LINE (45%) > Mitsui O.S.K. Lines (22%) > NYK Line (8%).

While liner trade is the core business of "K" LINE, the liner trade business accounts for only 8% of NYK's total sales, as the company follows a comprehensive route by land, sea, and air.

Revenues and Net Income

As an example of the sales and net income transition in the shipping industry before and after the Corona Disaster, we take Nippon Yusen Kaisha (NYK Line).

Comparing 2018 and 2019 to 2021 and 2022 after the Corona Disaster, net income has increased more than tenfold while revenue has increased moderately.

This is due to the surge in freight rates for cargo vessels due to logistical disruptions, which shows how sensitive the shipping industry is to market conditions.

Financial affairs

As an example of a profit-and-loss statement for the shipping industry, we take Mitsui O.S.K. Lines, Ltd.

Fiscal year ending March 31, 2022

Net sales   1269310[millions of yen]

Operating profit  55005[millions of yen]

Ordinary income  721779[millions of yen]

Net profit   708819[millions of yen]

Normally, operating income ≒ ordinary income, but we can see that operating income (55505) < < < ordinary income (721779).

This is because the profit of "ONE", an equity-method affiliate engaged in the liner trade (containership) business, is added to ordinary income as non-operating income.

The liner trade business, which boasts an overwhelming profit margin of over 100%, is added to non-operating income, resulting in recurring profit >> operating income.

Next, let us take "K" LINE. as an example of cash flow in the shipping industry.

In 2022, operating cash flow is expected to increase significantly, while financing cash flow is largely negative, mainly due to dividend payments.

(The company paid a dividend of 600 yen per share in FY2022, compared to no dividend in FY2020 and FY2021.)

Even with such a large dividend payment, the amount of cash is steadily increasing.

In addition, investment cash flow is highly variable from year to year due to the nature of the shipping industry, which requires large-scale investments. Examples of large investments include the construction of cargo ships and offshore development (e.g., new liquefied gas projects and FPSOs).

Annual income of employees

Net salesNumber of employees (consolidated)Number of employees (non-consolidated)average annual income
NYK2280775[Millions of yen]35081 persons1308 persons10.82 million yen
Mitsui O.S.K. Line1269310[Millions of yen]8547 persons1098 persons10.72 million yen
“K” LINE756982[Millions of yen]5390 persons821 persons9.90 million yen

The annual income of employees at all three companies is quite high.

NYK Line has an outstandingly large number of employees on a consolidated basis (35,081), and its affiliates and subsidiaries seem to have a large number of employees, perhaps due to its wide-ranging business activities on land, sea, and air.

"K" LINE's number of employees relative to its sales is quite small. While NYK's sales are about one-third of the company's total, the number of consolidated employees is about one-sixth. The same is true for Mitsui O.S.K. Line, where sales per employee are Mitsui O.S.K. Line ≈ "K" LINE > NYK.

"K" LINE's ROE is 117%, the highest among the three companies.

Future Outlook

The shipping industry is enjoying unprecedentedly strong financial results, but freight rates for both liner and tramp vessels are on a downward trend, and profits in FY2024 are not expected to be as high as those in FY2022 and FY2023. In the financial results for the fiscal year 2023, the majority of the full-year earnings were generated in the first half of the year when freight rates soared, and profits in the second half of the year are supported by the weak yen.

All three companies are currently in a very good economic situation with dividend yields of nearly 10%, but we will continue to focus on how the coming economic downturn will affect the financial results of the three shipping companies.

-Co. Ltd. Comparison