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Nippon Yusen Kaisha (abbreviated NYK) (OTCPK:NPNYY) is one of the largest shipping companies in the world. It is a member of the Mitsubishi group of companies, and is one of the original companies of the Mitsubishi Empire that was founded by the Tosa Samurai Yatarō Iwasaki after the Meiji Restoration.

Due to its size and relations with the worldwide network of the Mitsubishi companies - like the trading arm of the group, Mitsubishi Corp. (OTCPK:MSBHY), NYK has many insights into world trade patterns and especially the seaborne trade.

Each year, NYK publishes a fact book which summarizes the companies’ achievements and plans, but also provides great insights and statistics on the seaborne trade. And this is true for nearly all sectors of the shipping industry, since NYK is present in nearly all segments. It is thus a valuable read for anybody interested in the shipping sector and who does not have access to expensive research reports and statistics. The 2011 fact book was released just a few days ago, and I want to share a few things that caught my attention while reading it.

Containers

NYK provides a ranking of containership companies by fleet size (page 11). The largest companies are:

Vessels

Maersk Line (OTCPK:AMKBF)

545

MSC

394

CMA-CGM

348

Evergreen

158

Hapag-Lloyd

130

APL

137

CSAV

150

COSCO

139

Hanjin Shipping

100

CSCL

119

Mitsui OSK (OTC:MSLOF)

96

NYK (OTCPK:NPNYY)

92

The biggest change was Chile’s CSAV jumping from 14th place to 7th place in the ranking, otherwise there was not much change in the “top 20”. The top 20 companies controlled 84% of the fleet in 2010, a little more than last year (81%). The total fleet size increased from 12,937,933 TEUs to 14,092,321 TEUs. Container cargo movement increased by 13%, while freight rates were softer. In particular, the China-Europe trade (which had the biggest increase in freight rates in 2009) saw much softer freight rates. Asia continues to be exporting strongly, with Asia-to-Europe and Asia-to-USA container volumes being multiples of the shipping volumes in the reverse direction.

Car transport fleet

NYK is the undisputed leader in this space, with about 17.7% market share (100 vessels with a total capacity of 572,385 cars). Mitsui OSK comes second with 78 vessels and a 14% share. “K” Line is third (71 vessels, 11%) and EUROK (65) and Wallenius Wilhelmsen (49) are at 4th and 5th place in the ranking. The total fleet size in 2010 stood at 598 vessels with a total transportation capacity of 3.2 million cars. Car exports from Asian countries rebounded in 2010, but did not reach the record levels of 2008. The current level is a bit less than the 2006 level (9.15 million vehicles, with the biggest share coming from Japan and Korea).

Bulk carriers

The bulk freighter space is very fragmented, but a few companies really dominate the market. The top ten companies as of January 2011 (by kilotons of dwt) are:

Vessels

COSCO

349

NYK

186

Mitsui OSK

158

“K” Line

113

Zodiac Maritime

48

China Shipping Group

158

Cardiff Marine

60

Angelicoussis Group

29

Enterprises Shpg.

55

Hanjin Shipping

36

The list shows that the numerous listed dry bulk stocks (DryShips (NASDAQ:DRYS), Navios Maritime LP (NYSE:NMM), Diana Shipping (NYSE:DSX), Safe Bulkers (NYSE:SB) or Navios Maritime Holdings (NYSE:NM)) are not the top players in the market. China’s crude steel and iron ore imports continue to be at record levels. China’s market share of iron ore imports stood at 45%, and its market share of crude steel production at an amazing 61%. Dry bulk fleet tonnage increased by nearly 17% in 2010 and is expected to grow a further 13% this year, while the seaborne trade is only expected to increase by 6%. The fact book contains many detailed data about the trade of the various commodities (Iron Ore, Coking Coal, Steaming Coal and Grain), and a very interesting long-term chart of the dry bulk market that stretches back to 1971 (page 20). It really puts into perspective the enormous and extraordinary rise and fall of the dry bulk market over the past years.

Tankers

The Tanker space has more publicly listed companies among the top players (ranked by dwt)

Vessels

Mitsui OSK

104

Fredriksen Group (NYSE:FRO) (NYSE:SFL)

68

NYK line

62

Teekay Corp (NYSE:TK)

97

NIOC

45

SCF Group

116

MISC

78

Angelicoussis group

35

Overseas Shipholding (OSG)

61

China Shipping group

79

John Fredriksen’s group (consisting of Frontline (FRO), Ship Finance (SFL) and others) lost the top spot (which it had last year) to Mitsui OSK this year. Teekay and NYK have increased their number of vessels, while Mitsui and Fredriksen have less vessels in operation than last year. The volume of crude oil exports and imports given for 2010 looks rather flat compared to the 2005 number, but the volume is forecast to grow.

Page 22 of the report contains a great graph showing the volatility of the MEG-Japan oil route, especially over the last years. There are volumes of shipping history concentrated in this chart, from 1973 to 2011: (Click to enlarge)

vlcc market

LNG Fleets

There has been much action lately in the liquefied natural gas space, since the earthquake disaster in Japan required more LNG imports to Japan in an already rather tight market. Shares of publicly listed LNG carrier owners like Golar (NASDAQ:GLNG) or Teekay (NYSE:TGP) have seen significant appreciation in their share prices. Asian owners clearly dominate the LNG space. These are the top players according to the NYK factbook:

Vessels

NYK line

65

Mitsui OSK

72

“K” line

44

Other Japanese lines

75

South Korean lines

21

Project/Major

137

QGTC

50

MISC

29

Teekay Shipping (TGP) (TK)

21

Golar (GLNG) (NASDAQ:GMLP) (OTC:GOLAF)

13

Bergesen Worldwide

13

Exmar

8

Others

95

The statistics show an increase in LNG transactions over the last years, and the demand forecast is very optimistic for the coming decades. Europe, in particular, is forecast to import a higher part of its natural gas via LNG carriers.

The NYK fact book also covers other topics, like offshore, cruise ships and marine security. It is certainly an interesting read if you want to have a quick overview over what the current status and trends are in the worldwide shipping industry – whether you are an investor in individual shipping companies or in ETFs covering shipping like (NYSEARCA:SEA).



Disclosure: I am long FRO, SFL, TGP.

Source: NYK's Latest Fact Book: Insight on the Shipping Industry