140th Anniversary of Founding: Pursuing Reforms Toward the Next Stag
MOL President & CEO Takeshi Hashimoto delivered the following “2024 New Year Message” to all MOL Group officers and employees on January 4.
Happy New Year to everyone at the MOL Group. I hope everybody could enjoy peaceful and relaxing holiday to refresh yourselves. (I stayed in Singapore a few days to avoid Winter coldness which was wonderful!)
First, I would like to express my sincere condolences and deepest sympathies toward the people affected by the massive earthquake hit Hokuriku District of Japan, and pray for the safety of everyone in the disaster areas and for their swift recovery.
In April of this year, we will celebrate the 140th anniversary of our founding. While carrying on the proud history and traditions of the past, we will adapt to the society of the future and continue to take on the challenge of change throughout the group. I would like to share some of my thoughts as we start this year, which marks the beginning of a new era.
Looking Back at 2023
Last year, the global situation became more chaotic, and it was a time of renewed awareness of the impact of geopolitical risks on our group’s business. The Russian-Ukrainian conflict is still far from resolution, and there are concerns that the fighting may be prolonged. Last November, clashes between Israeli and Palestinian armed groups erupted, and Houthis captured a merchant ship in the Red Sea. U.S.-China relations remain strained, and there are concerns about how this will affect the international order, international cooperation and global economy.
On the economic front, inflation and interest rates continued to rise worldwide, and our group’s business faced the impacts of soaring ship prices, tight shipbuilding capacity, and a softening containership market.
Over the past year, we also felt the deterioration of the global environment due to a series of disasters caused by extreme weather around the world. Countries’ efforts to reduce greenhouse gas (GHG) emissions are not going smoothly, and they are reportedly having difficulty achieving their targets under the United Nations Framework Convention on Climate Change (UNFCCC). The world’s transition to alternative energy sources still faces many challenges, and our responsibilities in the shipping industry are growing as well.
Although our business environment remained unstable, the MOL Group’s financial results for the current fiscal year are expected to exceed our initial projections due to the continued strong market for chemical tankers and car carriers and the benefits of a weaker yen. We made a good start in the first year of our management plan “BLUE ACTION 2035,” which was announced last April, and it looks like we will be able to celebrate the 140th anniversary in a strong position. I would like to once again express my appreciation for the efforts of all group company executives and employees.
On the other hand, unfortunately, last year also saw three serious accidents and compliance incidents.
First, in September of last year, an accident occurred on one of our operated coal carriers, in which a seafarer’s life was lost during preparation for a cargo handling operation. I would like to express my deepest condolences and sincere sympathy to the bereaved family of the crewmember who lost his life.
Next, in November, there was a grounding incident involving a ferry operated by MOL Sunflower Ltd. Although the incident did not result in industrial injuries, or marine pollution due to an oil spill, it caused significant damage to the valuable cargo and to the hull of the vessel.
Finally, in December, MOL Cruises, Ltd. received a corrective action order from Japanese Authority after it was found to have violated the Mariners Act on the Nippon Maru by false reporting of staff’s overtime. This violation is an extremely serious matter, and we are thoroughly committed to preventing any recurrence.
The MOL Group has positioned the cruise and ferry business as a growth area and is pursuing investment in this field. Safety and compliance are at the foundation of our business activities, and we must not allow them to lag behind the pace of business expansion. We will sincerely face the issues that were identified last year and make improvements through the concerted group-wide efforts.
Next, I would like to touch on “BLUE ACTION 2035,” which started this fiscal year. Under “BLUE ACTION 2035”, in our move toward realizing our group vision, we have been enhancing our corporate value through “sustainability management” and “initiatives on our portfolio reforms to maintain profitability even during a recession of shipping industry.”
To succeed in our business portfolio reforms, we need to reorganize various systems and structures in addition to implementing the strategies of each business. Last year, we established key themes of the environment, human capital, digital transformation (DX), and governance, namely, “Environmental Vision 2.2,” “Human Capital Vision,” “DX Vision,” and “Corporate Governance Policies.” In April, we implemented a major restructuring to more effectively achieve these visions. You may have experienced some confusion and difficulty, but I think the reforms are gradually becoming more widespread thanks to everyone’s efforts.
Speaking of investment projects in 2023, the non-shipping business was a prominent topic, including a real property investment by Daibiru Corporation, an investment in the cruise business and the announcement of a new brand, the launch of Japan’s first LNG-fueled ferry, and investments in wind power and other decarbonization projects. In addition, we have proactively invested in the LNG carriers and offshore projects, and are making progress in reforming our business portfolio. In the ocean shipping business, we steadily placed orders for environmentally friendly vessels in the dry bulker, tanker, and car carrier segments, and paved the way for MOL Chemical Tankers’ acquisition of Fairfield Chemical Carriers. These are just a few of the accumulated investments that differentiate us from our competitors.
Outlook for 2024
Turning to our business environment this year, we continue to focus on geopolitical risk trends from last year. Upcoming elections will determine the governments of major countries, including the United States, so we anticipate that global conditions will become even more complex and uncertain.
On the economic front, we expect the economy to gradually return to a growth trajectory as inflation in Europe and the U.S. subsides and investment recovers due to interest rate cuts. In India and Southeast Asia, we expect business opportunities to expand due to robust domestic demand, government-led infrastructure investment, and the resulting increase in demand for energy. On the other hand, it will take some more time for the Chinese economy to return to a stable growth trajectory due to real estate problems and sluggish consumer spending.
The ocean shipping industry is acutely affected by global conditions, but under our corporate mission to ensure the prosperous lives of people around the world through open trade, we will define the optimum strategy and engage earnestly, while taking into account geopolitical risks and economic trends.
This year, we will focus on one particular item among our group’s growth initiatives.
In December 2024, the cruise ship Mitsui Ocean Fuji, purchased last year, will go into our own service. We are pursuing aggressive investment in the cruise business, and the future of this business depends on the success of the new service and brand.
It is also important to promote environmental strategies. In addition to environmental measures through the use of currently available technologies, we will aim to be on track to achieve zero-emission vessels at an earlier stage, and we intend to lead the industry in technological innovation.
Furthermore, this year brings the start of full-scale preparations for the adoption of International Financial Reporting Standards (IFRS) as part of the upgrading of our business management. This is a key initiative to improve management transparency and globalization.
This April, we will enter the second year of “BLUE ACTION 2035.” It will be a critical year, as we continue reform efforts and steps to solidify the foundation to drive the entire group on a growth trajectory. I will talk about three key points necessary to pursue the reforms.
First, human capital: In line with the spirit and principles of the “Human Capital Vision,” we will reform our personnel system so that all individuals can develop their strengths and maximize their competency.
Second is our digital transformation (DX). Last year, we established the “DX Vision” and have been thoroughly digitizing both our business and corporate culture. I hope to optimize our operations and organization as quickly as possible and become a corporate group that takes on the challenge of creating new value and solving social issues.
The third point is safety. This year, we are announcing the MOL Group’s new “Safety Vision.” As there were a collision with two aircraft at Haneda at the beginning of this year we realized again that Safety is the starting point and most important aspect of our group’s business. We will work to develop human capital to achieve safety, promote DX, adopt new technology, and review safety management systems. We will boldly and strategically work beyond the shipping industry to offer the world’s highest levels of safety and quality-to customers, the environment, and society at large.
Becoming a presence that befits a blue-chip company
In December, I attended COP28 in Dubai. I aim to enhance the group’s presence and brand power on a global scale by participating in COP and the World Economic Forum. I will continue to actively promote our corporate image as a company that proactively addresses environmental policy and other sustainability issues, with the goal of creating new business opportunities, such as participation in important projects around the world.
I have stated, “I want MOL to be viewed as an excellent company in every aspect. That is my goal.” We aim to be a corporate group that earns trust and high regard from all stakeholders from all viewpoints-addressing sustainability issues and improving the quality of services, profitability, human capital competencies, technological capabilities, and employee engagement.
We face many difficult challenges ahead, but I will do my utmost to meet them so that we can grow into a corporate group where you can always feel confident and proud to work for the MOL Group.
Finally, I want to pledge my commitment to safe voyages for all MOL Group-operated vessels. I wish you and your families a very happy New Year, as well as good health, success, and prosperity.
