Tuesday, December 15, 2009

Car Transportation Business Strategies of MOL, for Better Future Prospects

Car carrier division of Mitsui O.S.K Lines (MOL) set a shipment target of 3 million vehicles in the fiscal year 2008 (April 2008-March 2009) because volume of automobiles shipped across the world reached 14 million units in 2007. The company was able to meet target till October 2008. However, a steep decline of about 60% in year-on-year demand in the beginning of 2009 compelled MOL to restructure and revise its plan and it returned 4 ships and scrapped 15 in FY 2008. MOL also planned to lay up 11 vessels and scrap 6 more vessels in FY 2009. This downsizing will continue in 2010 and by March 2010 number of vessels will be 80 despite having target of 105 ships as per its MOL ADVANCE plan. MOL also implemented slow steaming and tried to stay away from night loading.

Car carrier market has witnessed some recovery in April 2009 but uncertainty still prevails. MOL, a multi-modal transport group headquartered in Japan, management believes that market will recover as cars are part and parcel of Europeans’ and North Americans’ daily life. And current economic downturn did not impact Australia much where demand for vehicles is still strong.

Since some automakers are expanding their businesses around the world, MOL is planning to increase its fleet that does not touch ports of Japan at all. MOL set up a subsidiary MOL Auto Logistics (India) Pvt. Ltd. for finished car transportation in November 2008 as the Indian car production capacity for both exports and local market is increasing. The Chennai-based subsidiary will offer port services for export and inland transport services using car trailers.

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