Kawasaki Kisen Kaisha, Ltd. (“K” LINE) and NIHON SHIPYARD CO., LTD. (NSY) have entered into a contract for the construction of three post-Panamax bulkers which NSY had newly developed and designed as next-generation, environmentally friendly ships. The new ship is a next-generation 92-type (92,000 deadweight tons) known as “K” LINE’s “Corona-series,” which are wide-beam, shallow-draft coal carriers optimally designed for transportation of coal to coal-fired power plants in Japan.

Phase 3 of EEDI*¹ will require bunkers (no less than 20,000 deadweight tons), for which construction contracts will be concluded in 2025 or thereafter, to be 30% more efficient in CO2 emissions compared to the EEDI standards. In pursuit of a further reduction in the environmental burden through greater fuel economy, the new ship is expected to achieve a 40% improvement in CO2 emissions efficiency based on NSY’s optimal ship development, including the newest main engine and the adoption of energy-saving accessories. Moreover, methanol-ready ship concept which assumes a shift toward methanol, a marine fuel with a low environmental footprint, will be adopted.

Outline of vessel

Under “K” LINE Environmental Vision 2050, a long-term environmental guideline *², “K” LINE has set a goal of improving CO2 emissions efficiency by 50% and achieving net-zero GHG emissions by 2050. As part of its associated action plans, it plans to implement a shift such as new highly eco-friendly fuels, the use of wind power propulsion systems. Going forward, “K” LINE will continue to strive to contribute to sustainable economic and social development and enhance corporate value while actively and flexibly responding to customers’ needs, including environmental responses which are expected to grow, and preserving the environment through business activities based on the “K” LINE Environmental Vision 2050.

*¹ EEDI: Energy Efficiency Design Index.

The EEDI estimates ship CO2 emissions when carrying 1 ton of cargo for 1 mile.

https://www.kline.co.jp/en/sustainability/environment/regulation.html

*² “K” LINE Environmental Vision 2050: Blue Seas for the Future

https://www.kline.co.jp/en/sustainability/environment/management.html#002

Kawasaki Kisen Kaisha, Ltd. (“K” Line) held the Asia Damage Prevention Meeting from December 7th to 8th in Bangkok, Thailand with the aim of improving transportation quality in the Southeast Asia region. The conference was attended by representatives of “K” Line and cargo-handling companies in Southeast Asia for discussion about how to improve quality services in marine transportation and cargo handling operations, around 40 people from seven countries.

The catchphrase of this conference is “Strict compliance of K Line SAFETY OPERATION PROCEDURE (SOP) is the guide to “ZERO DAMAGE “Strict compliance with “K” Line standard operating procedures (SOPs) is the guide to zero damage,” and the participants discussed how to improve quality services in the safe operation of car carriers. The meeting provided an opportunity to discuss the further penetration of “K” Line SOPs, sharing about new ideas of cargo handling equipment, operation procedures, and handling of next-generation cargo such as electric vehicles (BEVs). We also launched the K Learning system, a new education system for workers that we have started to introduce in worker training at each port. In addition, to encourage quality activities, we presented awards to the representatives of “K” Line and cargo handling companies in Southeast Asia that made exceptionally good efforts to achieve the best cargo handling quality in 2023.

We will always continue strive to improve “K” LINE global RORO service quality as we strengthen relationships with each Southeast Asian port through the regular Asia Damage Prevention meetings.

Kawasaki Kisen Kaisha., Ltd. (“K” LINE) held two global meetings at its head office, one for the LNG Group on December 11, 2023 and the other for the Carbon-Neutral Promotion Group on December 12, 2023. The meetings were attended by 14 national staff and representatives from 4 overseas offices, as well as top-level managers from the head office, who engaged in lively discussions.

The LNG Group meeting featured the positioning and role of the Group in the Medium-term Management Plan and the sharing of the Group’s targets and the progress on them, followed by presentations by each location on current issues and future initiatives. The Group also discussed the marketing strategies to be implemented in each area from the perspective of future action plans. The Group will improve its competitiveness by continuously strengthening its integrated customer-oriented support at sea and on land in sales and ship management, while also continuing to seek to increase its market share by collaborating with locations, going forward.

The Carbon-Neutral Promotion Group meeting spotlighted liquified CO₂ transportation recognizing it will take an important role in  the carbon neutrality of society, and participants from various location around the world exchanged opinions about business strategies. By gathering “K” Line’s expertise through the existing liquified gas transportation, we aim to contribute to the development of carbon capture storage projects through for the sustainable society and improve our corporate value.

In addition, a common session was held, where the Corporate Planning Group provided an explanation of the Company’s investment criteria and stance on investing, and also held a question-and-answer session. Participants were able to engage in cross-departmental discussion.

Going forward, “K” LINE will continue to regularly hold global meetings to share sector goals from a global perspective and, through these meetings, it will energize each location’s activities and deepen collaboration between locations to strengthen competitiveness, while also seeking to improve its customer-oriented services. “K” LINE will work to provide high-quality transportation services during the transition period while the energy mix is changing, thereby contributing to low-carbon and carbon-free initiatives for both ourselves and society as a whole.

K Marine Ship Management Pte. Ltd. (KMSM), a ship management company of the Kawasaki Kisen Kaisha, Ltd. (“K” LINE) Group, completed the development of a dedicated SIRE 2.0*¹-ready management module with SVM Solutions and Technologies Pte. Ltd. (Solverminds). This module is based on KMSM’s KONeCT*² ship management business platform and this development is ahead of the initiatives of other companies.

KMSM manages reports on ship safety, inspections, maintenance and other matters on KONeCT. KMSM and Solverminds started jointly developing a dedicated SIRE 2.0 management module that works on KONeCT in 2022. The dedicated management module was built to comply with the SIRE 2.0 ship inspection process. The module incorporates items from the new CVIQ*³ standard for SIRE 2.0,enabling the comprehensive management of processes from the preparation for inspections to the reporting after the completion of inspections. It is expected to increase the quality and efficiency of business.

The “K” LINE Group will further advance the digitalization of information and administrative processes as well as vessels, maintain providing industry leading safe and optimal service and continue to ensure safety in navigation and cargo operations.

*1. SIRE 2.0

The Ship Inspection Report Programme (SIRE), formulated and managed by OCIMF, has been revised and it is expected that SIRE 2.0 will start being used in the second quarter of 2024.

https://www.ocimf.org/programmes/sire

*2. KONeCT

Digital ship management platform developed by Solverminds and customized for KMSM. Previously, ship inspection results were reported via various media including email and Excel documents. KONeCT has realized the unified management of databases, consolidating ship management data including ship inspection information on a single platform. The platform has many functions serving as integrated solutions, such as a safety control system and safety and quality control, ship inspection management, scheduled maintenance, procurement and training functions. KONeCT is expected to further improve quality through methods such as the effective use of big data and process optimization.

*3. CVIQ

Compiled Vessel Inspection Questionnaire. A unique, vessel-specific set of questions compiled for each vessel inspection.

<Company profiles>

K Marine Ship Management Pte. Ltd

A ship management company fully owned by “K” Line and set up in Singapore on January 31, 2022. It manages oil tankers, LPG carriers, LNG carriers, LNG bunkering vessels and staffs vessels as one of the global bases of the “K” Line Group Companies supporting activities in Asia.

https://kmsm.kline.com.sg/

SVM Solutions and Technologies Pte. Ltd. (Solverminds)

A world-leading IT company providing enterprise resource management solutions, consulting and data analysis services to the marine transportation industry, a meeting place for businesses and technologies. Their vision is to develop truly integrated enterprise application suites for ship management companies and liner operators. They offer all types of technology products for liner operation management, ship management, agency management, advanced analysis, optimization, consulting, digitalization, support and development services utilizing deep technical knowledge and high-level technology platforms.

https://www.solverminds.sg/

Plant your feet firmly on the ground, think things through, and act swiftly.

To everyone in the “K” LINE Group, I would like to wish you and your families a Happy New Year. I hope that you were able to spend an enjoyable year-end and New Year period, and that you are ready to start 2024 feeling refreshed. I would like to express my deepest condolences to those who lost their lives in the Noto Peninsula earthquake that occurred on New Year’s Day, and my heartfelt sympathies to those affected. We hope to ensure the safety of everyone in the affected areas and hope for a soonest recovery.

Looking back on the past year, we have been shocked by the news reported daily in the media, such as the extremely challenging situation in the conflicts between Israel and Palestine, as well as the prolonged conflicts between Russia and Ukraine. We sincerely hope for the early realization of peace through international solidarity and cooperation. These increasing geopolitical risks and their impacts on the supply chain have the potential to jeopardize the freedom and safety of navigation, which is the foundation of international maritime transport. The global economy has increased the degree of uncertainty surrounding the business environment such as rising inflationary pressures, the tightening of monetary policy in countries around the world, and the impact on the Chinese economy of the real estate downturn. A careful response and attentiveness are required in business operations.

To continue to solidify our management base amid the accelerating pace of change, let’s properly analyze and swiftly respond to the constantly changing situation, demonstrate a renewed awareness of sustainable contributions to society as social infrastructure befitting these times, treat the changes we currently face as opportunities to think through things and take steady action to achieve growth and enhanced corporate value as a professional in the shipping industry.

This year “K” LINE will reach the mid-way point of the five-year medium-term management plan launched in FY2022. In the current fiscal year, while the overheated container shipping market conditions are returning to normal, our directly operated business is steadily making progress, thanks to the hard work that you do every day. To achieve our \140 billion target for ordinary income set out in the Medium-term Management Plan ahead of schedule, we keep focusing on businesses that play a leading role in driving growth, and also started to revise to our growth strategy to raise the bar from the targets laid out in the medium-term plan.

By maintaining investment discipline based on the investment practice of being restrained under favorable conditions and strategic under poor market conditions, we will aim to achieve sustainable growth as a company that boasts high market resilience. At the same time, we have introduced business-based responsible accounting management system, demonstrating an awareness of capital cost and cash flow by further advancement of business management. We will produce profits that exceed capital cost to bolster measures aimed at enhancing corporate value.

The keys to making steady progress towards sustainable growth and enhanced corporate value will be promoting customer-oriented sales and environmental sales , rolling out customer support that integrates operations on land and at sea with technology and marketing, and effectively refining specialized functions unique to the “K” LINE Group. We will set a new goal by taking a fresh look at where we are rooted, what our strength is ,and how we can obtain a competitive advantage to become the shipping company chosen by customers.

This year will be a first for the environment, because it is the year when the full-fledged adoption of the EU Emissions Trading System (EU-ETS) will start. We will deal properly with these regulations and become a shipping company that can provide solutions for reducing environmental impact to customers. In the world’s first full-scale carbon capture and storage (CCS),the Northern Lights project, the marine transport of liquefied CO2 will actually set off in Norway. We will bring our efforts to date to fruition as a new business and steadily link them to the businesses of offshore wind power support vessel and the transport of new forms of energy such as hydrogen and ammonia.

Last year “K” Line Maritime Academy Philippines, a training center for seafarers in Philippines of “K” LINE, celebrated its 30th anniversary. We must approach safety in navigation and cargo operations as our top priority, and the most critical factor underpinning that is the power of people. To achieve high levels of safety and transportation quality, we will implement detail-oriented safety management and quality control leveraging the power of people, while strengthening our three-region global monitoring structure combining people with technology as integral elements to complement advanced and digital technologies through the conversion of tacit knowledge into data, thereby providing safety and optimal services that put customers first.

Lastly, in terms of human resources, as a custodian of key infrastructure supporting a global society and in order to further expand our business in growth markets, particularly in Asia, we must develop and secure human resources who can adapt flexibly to changes in the business environment. Starting this fiscal year, we also revived “K” LINE UNIVERSITY. Our aim is for human resources with a diverse range of values to maximize their abilities in a safe and comfortable work environment. In addition to business management training, we will enhance business training in shipping and onboard training to promote the development of strong marine professionals, and advance DX training for all employees to ensure greater readiness for business transformation.

2024 is the year of the wood dragon according to the Oriental Zodiac. Wood represents the growth of plants and trees and describes how a plant increasingly gains vigour and size as it grows. By making further efforts in this year of the dragon, let’s put down strong roots and lay the foundations for growth. Along with my best wishes for the year ahead, I hope that around this time next year we will be discussing all that has been accomplished. Finally, I wish safe operation of all our vessels.