MITSUI OSK Lines (MOL) president and chief executive Junichiro Ikeda is no stranger to adversity. In his first decade with the Japanese shipping giant, he witnessed a massive downsizing of the company brought on by bottomline pressure as a result of a then appreciating Japanese yen.
The experience through the 1980s during which Mr Ikeda spent his early years with MOL clearly left an imprint on his mind even with his steady progress up the corporate ladder in the years to come.
"Shipping, especially Japanese shipping, suffered the most (and) many colleagues of mine left the company," the MOL veteran tells The Business Times.
Given that lifetime employment was still deeply ingrained in the Japanese corporate culture back then, Mr Ikeda was understandably deeply affected by that first downsizing exercise of his shipping career.
In the 1980s, MOL relied on Japanese customers for 80-90 per cent of its business volume. This also exposed MOL - which was founded in 1884 - to severe recessionary pressures in Japan from a steep hike in energy costs following the Arab oil embargo in the 1970s.
By its very nature of serving the world's trade flows, shipping is a highly cyclical sector. As a shipping company then leaning largely on transporting resources into Japan and re-exporting manufactured goods overseas, MOL had its fortunes closely entwined with the ebb and flow of its home economy.
"It was an export-driven economy then and our Japanese customers were very reliant on MOL for the transportation of their manufactured goods," says Mr Ikeda, who turns 60 in July.
He had joined MOL in 1979 upon graduating from the University of Tokyo's faculty of law, and - despite the initial trough in the 1980s - has soldiered on with the company throughout his entire career. He rose steadily through the ranks, including an early stint with MOL (Europe) in London, and took the helm in June 2015, determined to steer the company towards its long-term vision of becoming "an excellent and resilient organisation that leads the world shipping industry".
There was no honeymoon for the new CEO. The latter half of 2015 saw a steep decline in oil prices and fleet over-supply across most of MOL's key business segments. The challenging environment prompted Mr Ikeda to urge his colleagues to aspire towards excellence and resilience by opening up to new ways of doing things. "We must not be content to rely on methods that worked in the past… because past experience does not guarantee our future success," he said in his 2016 new year address.
The shipping giant had moved with the times, in line with changes in the Japanese economy over the years, through its ventures into new businesses including the transport of liquefied natural gas (LNG) cargoes and the leisure cruise ship business in the 1980s.
Its fleet of LNG carriers in particular has grown strongly to reach 69 vessels as of March 31, helped not least by Japan's push to reduce its energy dependency on crude imports from the Middle East by importing LNG from producers in the Asia-Pacific.
That puts MOL at number one in LNG carrier (LNGC) vessel count, or about 15 per cent of the about 530-strong global operating fleet, Mr Ikeda tells BT. The LNGCs on MOL's fleet have secured long-term contracts guaranteeing stable income for MOL in the years to come.
This developing revenue stream, however, would take time to gain traction in MOL's shipping portfolio, which is still over-represented in terms of topline performance, by revenue contributions from bulkships and containerships.
A large bulk of the 1.71 trillion yen (S$21.5 billion) revenue MOL posted for FY15 still comes from bulkships and containerships, which bring in 839.1 billion yen and 721.1 billion yen respectively.
Mr Ikeda notes the current downturn is "especially more profound" in these two core segments of MOL's shipping portfolio, which have seen drastic declines in vessel charter rates resulting from a commodity slump and slowing global trade.
Capesize bulkships - the biggest in the category of cargo ships - took the biggest hit, with declines of about 50 per cent or more in average charter rates through the first three months of 2016 as the Baltic Dry Index (BDI) fell by 33-46 per cent, MOL said in an April 2016 disclosure.
The Shanghai Containerised Freight Index - which largely tracks spot rates in the shipping market for containers leaving China - has also fallen by 58 per cent since February 2016, in line with the downward trend in the BDI, according to a published report by Blackwell Global Investments.
Speaking to BT during a visit in early March, Mr Ikeda indicates that downsizing plans for the bulkships and containerships segments were in the offing.
The MOL president would subsequently follow through with an announcement in late March, which confirmed that the shipping giant would be recording 179.3 billion yen in extraordinary loss this fiscal year as a result of the structural reforms in bulkships and containerships operations.
MOL's fleet of bulkships and containerships has since shrunk to 403 and 95 as of March 31, down from 411 and 118 a year ago.
Besides streamlining its operating fleet through early cancellation of charter-in vessel contracts and divesting capesize bulkers of charter-in vessels, MOL also decided to dissolve the Singapore-based subsidiary, MOL Bulk Carriers Pte Ltd (MOLBC), and consolidate its operations into a division based out of Tokyo.
Within the containership segment, MOL has sought to reduce operational costs by rationalising trade routes and reducing sailings.
"The years of 2016-2017 will spell continued tough times for bulkships and containership segments," Mr Ikeda tells BT. But he also maintains that these two segments "will remain (MOL's) core" and the downsizing does not equate to "reducing our market presence". Looking beyond this downturn, he said: "I believe in the future of the two segments… (although) I like to see a balanced mix of our shipping portfolio going forward to hedge against downcycles in any individual segment."
Weeks after announcing the closure of MOLBC, MOL unveiled its Hong Kong-based LNG carrier management company, MOL LNG Transport (Asia) Ltd, which began its ship management operations with its first vessel on April 18.
Mr Ikeda is bullish on the revenue expansion from the LNGC segment, partly because he expects the vessels that have already secured long-term contracts with Japanese utility groups to bring new revenue streams for MOL when they begin operations in two to three years.
Yet, the future of Japan's LNG demand is also looking uncertain with the government of Prime Minister Shinzo Abe having set out to restart nuclear reactors shut since the Fukushima disaster, which will reduce the country's reliance on LNG imports from the Asia-Pacific.
Within the LNG space, MOL has already secured charters with clients outside Japan, in line with Mr Ikeda's vision of geographic diversification.
In a tie-up with Chinese partners, MOLhas been transporting LNG cargoes for China's national oil company, Sinopec, from an ExxonMobil-operated Papua New Guinea LNG project.
The contract win with Sinopec is aligned with Mr Ikeda's aim of diversifying the geographic spread of MOL's operations. With its globalisation drive, MOL seeks to go beyond tracking the manufacturing footprint of its Japanese clients.
And the results are encouraging. "We have diversified our customer base - now about 60 per cent of our (group) revenues come from Japanese customers, compared to 80-90 per cent in the 1980s," he points out.
Within the LNG space, MOL has already successfully extended its reach to Indonesia. Since its first contract win for coastal transport of LNG in Indonesia using the 126,300-cubic metre ship, LNG Aquarius, with Trada Maritime in 2011, BT understands MOL has also ventured into small-scale LNG shipping.
The 20,000-cubic metre LNG tanker, Surya Satsuma, jointly owned by MOL and Jakarta-listed Humpuss Intermoda Transportassi, was last reported in BT as the strong contender for the first in a series of mini-LNG vessel contracts lined up in Indonesia to supply power plants being built under state utility PLN's independent power producer scheme.
Beyond transporting cargoes, Mr Ikeda says MOL can also extend its know-how in the LNG trade to promoting the use of the cleaner burning hydrocarbon fuel in ship bunkering.
As a ship owner, MOL has taken the first step towards building LNG bunkering capabilities into its fleet. "We have decided to build and charter six 20,000 teu containerships and the main engines have specifications which enable LNG use as a fuel (on further modification). These ships will be delivered in 2017," Mr Ikeda says.
The MOL president is referring to the newbuild contract the Japanese ship-owner has signed for the construction of four mega containerships with Samsung Heavy Industries and a second long-term charter with Shoei Kisen Kaisha for two further units being built at Imabari Shipbuilding. BT understands the shipbuilding contract with Samsung carries an option to modify the newbuilds to be powered by LNG. All six vessels have been earmarked for servicing Asia-Europe trade.
The shipbuilding and chartering contracts announced in March 2015 will go towards helping MOL meet regulatory caps on greenhouse gas emissions being imposed by the International Maritime Organisation.
Mitigating the environmental footprint of shipping operations is, to Mr Ikeda, "one of the most important considerations" for the future of the industry.
As with many others in the trade, Mr Ikeda maintains that "shipping is one of the most eco-friendly modes of transporting goods", with a carbon footprint much smaller than air freight. He acknowledges however, that in absolute terms, the industry as a whole emits massive volumes of carbon dioxide.
The MOL president believes ship bunkering will eventually shift from oil to LNG. He sees a global thrust towards green shipping that could evolve into a competitive advantage for larger shipping companies such as MOL. Smaller players lacking the financial clout to invest in ships compliant with new environmental standards could most likely get squeezed out of the game.
Well into his fourth decade at MOL, Mr Ikeda is still passionate about an industry and a company that caught his eye when he was on the hunt for his first job on graduation.
He recalls being drawn to photos of ships in the recruitment pages while sifting through the newspapers back then.
After paying a visit to MOL, he had his heart set on joining a "dynamic organisation" that he would helm 37 years later, becoming now a busy corporate man who likes to enjoy, during what little leisure he has, a good laugh watching his favourite Japanese entertainment programme at home.
"I knew I wanted to do great things on a global scale," he says, and those words still hold true today.
President & CEO Mitsui OSK Lines
1956 Born in Nagano, Japan
1979 Graduated from University of Tokyo's Faculty of Law
(ALL WITHIN MITSUI OSK LINES)
1979 Joined Mitsui OSK Lines (MOL)
1986 Began attachment to London branch office
1998 Appointed as Deputy General Manager, Asia-Europe Trade
2001 Became Deputy General Manager, Corporate Planning Division
2004 Appointed as General Manager, Human Resources Divisiion
2007 Promoted to General Manager, Liner Division
2010 Appointed as Managing Executive Officer
2015 Promoted to Representative Director, President and CEO