Mitsui O.S.K. awaits safety clarity, government guidance to move vessels from the Gulf, CEO says

Japan's Mitsui O.S.K. Lines (MOL) wants to start moving its vessels stranded near the Strait of Hormuz as soon as possible but must first ensure safe passage and receive guidance from the Japanese government, its chief executive said on Thursday.

Although U.S. President Donald Trump agreed to a two-week ceasefire with Iran on Tuesday, there is still no sign that Tehran has lifted its blockade of the strategic waterway, which has disrupted global energy supplies and snarled supply chains.

"It's not yet clear how this ceasefire will be implemented in the relevant waters," MOL President and CEO Jotaro Tamura told Reuters in an interview. "It must be confirmed that the safety risks are sufficiently low." 

He added the company was also awaiting guidance from the Japanese government.

Three of MOL's tankers - one LNG carrier and two LPG vessels - crossed the strait earlier this month, the first Japan-linked ships to do so since the conflict began. Tamura declined to comment on those crossings but said multiple vessels remain in the Gulf.

Tamura, who was promoted to his current roles from April 1, said the company has secured enough fuel oil for operations through the end of May.

If the conflict drags on, raw material shortages could affect manufacturing activity and reduce cargo volumes, he said. Over the longer term, however, the crisis could benefit shipping if companies move to strengthen their supply chain resilience.

"If reassessments occur in the resources and energy sectors, decisions that were previously based on economic rationality during normal times may be deemed rational even when uneconomical," he said, pointing to procurement from more distant locations or at higher costs, or to holding additional inventory that would previously have been seen as an unnecessary expense.

PROFIT FORECAST REVISION

Elliott Investment Management has taken a "significant" stake in MOL, pushing the shipping company to improve shareholder returns and capital efficiency.

Tamura declined to comment on discussions with individual shareholders but said that the mid-term management plan announced in March had not been influenced by Elliott's requests.

Under that plan, MOL forecast pre-tax profit of 200 billion yen ($1.26 billion) for the financial year started this month.

However, Tamura said that the company plans to revise its outlook when it announces its annual results later this month. He did not specify whether any revision would be upward or downward.

($1 = 158.9700 yen)