K Line earmarks $740 million for environmental initiatives

Japanese shipping major Kawasaki Kisen Kaisha Ltd (K Line) has laid out its short-term investment plans in a newly released report, earmarking a significant portion for environmental initiatives.

“First of all, we aim to invest a total of ¥250.0 billion ($1.85 billion), within the amount of operating cash flows, over the five-year period beginning with fiscal 2021. Secondly, we will budget ¥100.0 billion ($740 million) out of this amount for environmental investments. Lastly, we plan to invest in new growth fields while carefully assessing the inherent risks based on our progress in improving our financial position,” Yukio Toriyama, the company’s Representative Director, and Chief Financial Officer said.

Financial discipline has been one of the key traits of the company, however, K Line explained that it was important to revise its investment plans in order to develop new business portfolios and accelerate environmental investments in line with market trends.

Out of the said investments, K Line plans to assign ¥25 billion in environmental technology development, including research and development for alternative fuel technologies as well as other new low-carbon and zero-carbon technologies and fuel efficiency. Around ¥10 billion would be assigned for scrubbers, ballast water treatment, and wind propulsion systems such as Seawings.

The same amount is intended for new businesses in the low-carbon sector such as LNG bunkering and renewable-energy-related activities. Finally, between ¥50 and 70 billion is planned for vessels using alternative fuels such as LNG.

Last year, K Line ordered eight LNG-fuelled car carriers, following the delivery of its first LNG-powered car carrier Century Highway Green.

The 7,000 CEU vessels will be built by shipbuilding companies Nihon Shipyard, Shin Kurushima Dockyard and China Merchants Jinling Shipyard. Two units will be constructed at each of the three shipyards. They are slated for delivery between 2023 and 2025.

“Traditionally, our shipping business has been prefaced on the idea that vessels continue producing profit over at least 20 years of operation. However, the recent tightening of environmental regulations and accelerating technological innovation have made it increasingly unclear whether a newly built vessel will be able to maintain its competitiveness over such a long term,” Toriyama added, noting that the switch to greener supply chains and shift to alternative fuels are dictating business strategies.

“The shipping industry is undergoing a massive paradigm shift, the likes of which only come around once in a century. This shift can be seen in trends including the use of new fuel sources such as hydrogen and ammonia as replacements for conventional fossil fuels and companies pursuing the development of next-generation automated ship navigation systems. If we are unable to adapt to these changes, our business will fail to survive. These changes to the shipping industry present both opportunities and risks.”