Japan’s Mitsui OSK Lines (MOL), best known for its commercial shipping operations, is looking at new avenues for growth, including investing in its cruise operations. While not known for its cruises, the company has operated a single cruise ship in the domestic market for the past 30 years, in addition to its passenger ferries.
MOL confirmed that its board has approved a plan to build two new cruise ships that would continue the company’s long tradition in passenger shipping. The initial plan calls for an investment of approximately $719 million for two 35,000 gross tonnage cruise ships, the first of which is expected to be delivered around 2027. The cruise lines would be a successor to the company’s popular cruise lines Nippon Maruwhich was built in 1990.
The decision to build the two ocean-going cruise ships is part of a portfolio strategy to strengthen the non-shipping business. The new cruise lines would be used to meet domestic and international cruise demand, which MOL said is less associated with volatility in the shipping market and is expected to increase in the future.
Discussing the decision, MOL President and CEO Takeshi Hashimoto told Nikkei that they see the cruise industry in Japan as a rare growth opportunity. Nikkei reports that MOL is considering building two more cruise ships if the first two ships are successful.
The board’s approval of the plan to expand cruise operations followed Japan’s recent announcement that it is reopening to international tourism and will be allowing international cruises again after a two-and-a-half-year hiatus due to COVID-19. MOL’s Nippon Maru had ceased operations in February 2020 but was allowed to resume sailing on short domestic cruises as of October 2020.
MOL will be the first to operate an international cruise on the Nippon Maru scheduled to embark on a special 48-day cruise on December 15th wakashio, owned by MOL, the company promised to operate a cruise to the island. That Nippon Maru is scheduled to sail with stops in Singapore, Male in the Maldives, Port Louis in Mauritius and Toamasina in Madagascar.
The cruise business, previously marketed only in Japan, continues the company’s passenger operations dating back to the 1880s and the formation of predecessor companies Osaka Shosen and Mitsui Sensen, which operated transpacific passenger services into the 1960s. MOL transitioned to cruising in 1972 and, in response to increasing demand in Japan for leisure cruising, decided to buy and then build modern cruise ships.
That Nippon Maru, which is 547 feet long and 22,472 gross tons, remains popular as one of only three specialty cruise ships operating in Japan. It was built by Mitsubishi and only carries 524 passengers. She has been modernised, including an overhaul, before returning to service in 2020, but is considered obsolete by modern cruise industry standards.
NYK also has domestic cruise operations, with its only ship being the Asuka IIwhich was also built by Mitsubishi in 1990. However, NYK has placed an order with Meyer Weft for a new cruise ship to be delivered in 2025. Japan’s third cruise line, Venus, recently announced that it will cease operations by 2023.
MOL’s decision to expand its cruise operations is part of a diversification effort. Currently, 80 percent of revenue comes from the container ships operated as part of One Network Express (ONE). The company has recently expanded its real estate investments, including to Southeast Asia. Like many Japanese companies, they are looking for opportunities in the burgeoning offshore wind industry. MOL launched its Wind Power Energy business in 2021 and has made investments including operating Taiwan’s first custom-built SOV and a Dutch startup developing floating wind turbines.
Hashimoto told Nikkei that he believes the company’s core shipping business will grow only slowly. He anticipates the fleet will remain similar in size, although they will work to replace ships with new green technologies.