After two decades of falling freight rates and heavy losses, Tokyo-based Mitsui OSK Lines Ltd. is enjoying its best profits ever. It's a miraculous transformation that has President Akimitsu Ashida optimistic about the prospects for turning Japan's No. 2 maritime shipping company into a global powerhouse, just a few years after it looked like a goner. Ashida is presiding over one of the swiftest expansions in Mitsui's 121-year history as he adds 60 ships to the company's 645-ship fleet. The company is not worried about overcapacity because it plans to lease nearly half the new vessels via short-term two-year leases. That way, it is not locked into high fixed costs if demand falters. ``The industry is cyclical, but our business doesn't have to be that way,'' says Ashida.
What's driving Mitsui OSK's earnings is global growth, the insatiable demand for cargo space, and the resulting runup in shipping rates. In the first quarter, Mitsui OSK posted net earnings of $275 million, a 37% jump from the previous year, on sales of $2.73 billion, which were up 11.3%. By locking in more freight deals with customers for 5 to 10 years -- up from the usual 1 to 2 years -- Ashida hopes Mitsui OSK will save some of those profits for the hard times.