News & Media

01 July, 2019

LNG Market News - Japan

(Source: Kaiji Press News 01/Jul/2019)

Imabari SB stepping up cooperation with MSB Nagasaki

Entrusting construction of Navios-bound VLCC

Imabari Shipbuilding and Mitsubishi Shipbuilding (MSB) will be cooperating in the construction of VLCCs. In 2018, Imabari received an order for four 310,000-dwt VLCCs from Greek shipowner Navios, and the shipyard announced on June 27 that it has commissioned the construction of the last unit of the four VLCCs to MSB's Nagasaki Shipyard (Koyagi Plant). It is based on the alliance between MSB and Imabari in the merchant ship business. In the Mitsubishi Heavy Industries (MHI) group, MHI Marine Structure handling ship construction at the Koyagi Plant continues to face bleak orders for core gas vessels. Amid such, the deal comes under the cooperative system.

Imabari and MHI Marine Structure signed their ship processing/assembly consignment contract on June 27. Under the pact, the ship design and materials/equipment will be provided by Imabari. The Navios-bound 310,000-dwt VLCC series are based on a cutting-edge model developed by Imabari. The last vessel, to be built at the Koyagi Plant, is scheduled to be completed in the autumn of 2021. Imabari itself is building VLCCs for the first time in about 10 years, and they are the first VLCCs for delivery to an overseas owner. Imabari hopes to hone its competitive edge and ensure a steady enforcement of its newbuilding projects by ramping up its partnership with MSB/MHI Marine Structure.
Koyagi Plant will be building a VLCC for the first time in about 8.5 years since 2013 on a completion basis. For Koyagi which has focused on vessels that require high rigging density such as LNG and LPG carriers and passenger ships, the construction of a hull-centered vessel like a VLCC comes after a long hiatus.

In addition to the alliance in merchant ship business, Imabari and MSB have been building up their cooperative relationship, such as undertaking a joint marketing of LNG carriers through their joint venture, MI LNG Company. When the duo agreed on their alliance, they envisaged making joint bids in large-lot containership and LNG carrier construction programs for joint order acceptance. However, this proved difficult amid the continued slump of ship prices and newbuilding demand. The latest VLCC deal has broadened the scope of their cooperation.

The new Imabari-MSB deal seems to indicate that an alliance between yards has begun to spread from mutual provision of technologies and engineering and joint order acceptance to construction consignment and sharing in accordance with work abundance and lack.

MSB and MHI Marine Structure, the predecessors of MHI Group's shipbuilding segment, used to have close relationships with dedicated shipyards in technology and personnel aspects. They had accommodated engineering work and personnel with each other and Koyagi Plant had manufactured hull blocks bound for dedicated yards.

Among Japanese yards, mutual collaboration such as accommodation of hull blocks and dispatch of workers depending on the degree of factory's press and slack of business has been a common practice. More recently, gaps in workforce demand have begun to surface among yards. While some face a slower operation and workforce surplus due to the prolonged slump of the newbuilding market, others are in need of more workers to recover the delay in their difficult construction work. Some others are unable to complete their work within the agreed period due to tightened overwork regulations and difficulties in securing necessary workforce. In such situation, construction consignment and sharing in a flexible manner may become widespread among Japanese yards.

(Source: Kaiji Press News 28/Jun/2019)

Marubeni to enhance in-house coop on pool, LNG carriers

Hisatomi, GM of Ship Dept., talks about Marubeni's business strategy in interview

Marubeni Corp. is planning to enhance its pool operation and LNG carrier businesses further while stepping up in-house collaboration. While such traditional trading businesses as offering good offices for newbuildings have entered a transitional period, Marubeni is aiming at converting its business model by capitalizing on its trading house functions. Takeshi Hisatomi, who became general manager of Ship Dept. on April 1, talked about Marubeni's business strategies in a recent interview with Kaiji Press (KP). 

Salient remarks Hisatomi made during the interview are as follows:

[Fostering human resources is a challenge]

KP: Marubeni is handling a broad variety of service menus ranging from trading to ship-owning, LNG carrier and pool operation businesses in a well-balanced manner.

Hisatomi: Adding various functions as a service provider enables us to respond widely to our customer needs. Traditional sale/purchase trading and offering the good offices in ship charters represent the most basic of basics in businesses handled by the Ship Dept., and so, we will continue with such businesses going forward. In reality, however, the overall volume of such transactions has unfortunately been on the decline. Amid the decreasing number of projects, younger staffers can hardly secure opportunities these days for accumulating practical experiences which we used to have undergone while young, and it has become hard to foster personnel resources as a result. Under such circumstances, how to develop human resources from here on is one of major challenges Marubeni needs to address. The good offices in ship sale/purchase deals cannot necessarily be enhanced simply by increasing the number of staffers concerned. To achieve this goal, we need to build relations of trust with our customers to win orders from them and also secure a determination to carry through projects with proper expertise and information. How should we foster human resources in keeping with the times? Without the steady growth of human resources, we cannot survive.

KP: How about the ship-owning business?

Hisatomi: In the ship-owning business, Marubeni set up a wholly owned subsidiary, MMSL Pte. Ltd., in Singapore in December 2011, and has since bolstered this business. As we have been engaged in this ship-owning segment steadily with charter contracts attached, we have rarely been hurt. Yet, since the charter contracts for high-priced ships are slated to expire one after another going forward, we may be confronted with challenges that cannot be resolved in conventional ways unless the market recovers from here on.

KP: Does Marubeni plan to continue to engage in the ship-owning business steadily?

Hisatomi: We have handled the ship-owning business since the 1970s, and at one time put speculative orders and incurred damage, With such bitter experiences in mind, we have been engaging in the ship-owning business while restraining ourselves. Going forward, we will seek to secure a balance among ships in our fleet as a whole in terms of profitability and such.

KP: Tell us about Marubeni's fleet of owned ships.

Hisatomi: We have about 50 ships in total that are handled at the Tokyo head office as well as at the subsidiary in Singapore. As we have room to increase ships slightly, we hope to raise the number. Yet, we cannot expand the ship-owning business without any limit, nor are we able to make drastic investments such as selling/purchasing ships as a package just like Greek owners do. So, we have to alter our business model in keeping with the times. Going forward, our image is that we will add operations derived from the ship-owning business.

[Differentiating LNG as a package]

KP: How about LNG carriers?
Hisatomi: Currently, we have a fleet of 16 LNG carriers, 50% of which are owned ones. As LNG is a clean energy source, demand for LNG carriers has a potential to grow further. Meanwhile, a significant number of newbuilding orders have been put for speculative purposes, and charter periods are getting shorter and shorter. As such, for each project, we won't hereafter be able to take on as many risks as we used to in the past. Consequently, joint ship-owning projects with a greater number of stakeholders, among other undertakings, may increase from here on.
Horizontal in-house collaboration between departments and divisions is the current trend of Marubeni, and so, the Ship Dept. will work closely together with the Power and Energy divisions in the LNG carrier business. As information on tenders, for instance, can be obtained by the Energy and Power divisions earlier than our department, we intend to cooperate with these divisions going forward.

[Offering financing, leasing services, too]

KP: Marubeni is also dealing with pool operations for grain haul as part of in-house collaboration.

Hisatomi: In the pool operation business, we currently operate ships to the tune of 15 units, and have been pushing forward with efforts to lure more shipowners into our pool. The cargoes we haul are not limited to our own grains. We sometimes haul grains of Cargill International and Archer Daniels Midland (ADM) as well, and there are some cases in which we charter our ships out to Japanese shippers and operators.

KP: In recent years, Marubeni has been offering financing and leasing services as well.

Hisatomi: Up until the 1990s, we have rarely handled projects in which we sell off ships alone, and ship loans have been extended as package deals. Since around 2000, we ceased to engage in ship financing. Currently, however, we are steadily handling a greater number of sale & leaseback projects than before in cooperation with compatriot leasing firms.

KP: Marubeni has also been handling the FSRU (floating storage & regasification unit), FPSO (floating production, storage & offloading) and offshore wind power generation businesses.

Hisatomi: The FSRU and FPSO businesses are handled by our plant unit, and our power unit is taking the initiative for offshore wind power generation. If there are such projects, we are keen to actively participate in them.

KP: The business menu has been on the increase at Marubeni. Tell us about the personnel setup.

Hisatomi: The Ship Dept. at Marubeni is comprised of around 120 staffers, including those at MMSL and other group entities. We have no plans to increase the workforce any further. The current Ship Dept. has been created through the integration of the general commercial ship and LNG/offshore divisions, and almost all the sections that existed at that time are still in place in their original forms without undergoing any major realignment. While making these sections more efficient, we hope to foster human resources competent enough to handle new businesses.
(Interviewed by Kazuhiro Tsushima and Hiroki Matsui)

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