1-1, Toranomon, 2-chome

Telephone: (03) 3587-7111
Fax: (03) 3587-7702

Public Company
Incorporated: 1964
Employees: 1,610
Sales: ¥455.8 billion (US$3.65 billion)
Stock Index: Tokyo Osaka Nagoya Kyoto Hiroshima Fukuoka Niigata Sapporo Brussels Antwerp Frankfurt

Company History:

Mitsui O.S.K. Lines, Ltd. (MOL) was founded in 1964 following the merger of Osaka Shosen Kaisha (OSK) and Mitsui Steamship Co., Ltd., formerly Mitsui Line, under the Law Concerning the Reconstruction and Reorganization of the Shipping Industry. At that time the company was the largest shipping company in Japan, capitalized at ¥13.1 billion, with 83 vessels aggregating 1,237 thousand pennyweight (dwt).

OSK was founded in 1884 when 55 shipowners, each of whom had only a small number of vessels, combined their operations. The chief representative of these shipowners was Hirose Saihei, senior manager of the Sumitomo zaibatsu, or conglomerate, and a prominent figure in Osaka financial circles. OSK was capitalized at ¥1.2 million, with 93 vessels totaling 15,400 gross registered tonnage (grt). In the first few years its routes were limited to coastal services in the western area of Japan. In 1890 OSK inaugurated an Osaka/Pusan run followed in 1893 by the operation of an Osaka/Inchon route and Korean coastal services. The company was recapitalized at ¥1.8 million in 1893, rising to ¥2.5 million in 1894, to ¥5 million in 1896, when the government of Taiwan granted OSK subsidies for Osaka/Taiwan liner services, and to ¥10 million in 1898 when the company started to operate on the Yangtze River.

In 1898 Tokugoro Nakahashi became the company's fourth president. He made a great effort to rationalize the internal organization of OSK, to penetrate the Chinese market, and also to inaugurate the first OSK ocean route, a Hong Kong to Tacoma, Washington service, in 1908. In 1911 OSK started a Kobe to Bombay service. The route was under the monopoly of the Far Eastern Freight Conference (FEFC) of which Nippon Yusen K.K. (NYK) was the only Japanese member. OSK fought against the FEFC and was admitted to the conference in 1913. In 1918 the company opened a Bombay to Marseilles route and was admitted to full membership of the Far Eastern Freight Conference (FEFC). Meanwhile, it opened a San Francisco route, an Australia route, and a South America route, offering a worldwide liner service. It began a New York service in 1920 but operated at a deficit. In 1930 OSK made a huge investment in five new high-speed motor ships in order to start a New York express service. This service entirely transformed raw-silk transportation from Asia to America; raw silk began to be carried by water all the way to New York instead of going by land. OSK's share of cargo shipped on this route grew, and its business performance improved in spite of unfavorable business conditions. During the Depression, OSK and NYK made a cooperative agreement in 1931 whereby OSK abolished its Puget Sound route, which had called at Tacoma and Seattle, and in turn acquired a monopoly on the South American east coast route. OSK quickly recovered from the deficits of 1930 and 1931, and resumed paying dividends in 1932. The company's profits peaked in 1941, when OSK was capitalized at ¥87 million and had 112 vessels aggregating 557,126 grt.

During the war OSK, like other Japanese shipping companies, was forced to be a mere shipowner. When the war ended it had only 55 vessels left, totaling 143,976 grt, most of which were so-called wartime standard ships, of poor quality. All ships were under control of the Allied powers through the Civilian Merchant Marine Committee. In 1950, however, OSK returned to global service. By the end of 1957 the company had almost recovered the sailing rights it had been given by the FEFC before the war, and was making 18 voyages per month on 13 overseas liner routes. Competition was far more intense than before the war, as anyone who had money could construct ships under the government-sponsored shipbuilding program, started in 1947. Before the war, conference members had sought to exclude newcomers. OSK constructed 38 ships under the program. In 1953 OSK established an eastbound route to South America to transport emigrants from Japan. At first the service was profitable, but the number of emigrants fell to below 2,000 per year in 1962. In 1963 OSK established the Japan Emigration Ship Co., Ltd. (JES) to hive off this lossmaking business. Later, JES was reorganized into Mitsui OSK Passenger Co., Ltd. In this period most of OSK's businesses were lossmaking. In 1964 it owned 41 vessels totaling 376,539 grt. The company was capitalized at ¥7.6 billion and its debts totaled approximately ¥34.9 billion.

Mitsui Line was originally the shipping department of the trading company Mitsui Bussan Kaisha. Mitsui Bussan was established in 1876 and obtained exclusive rights to export and market the coal mined at the state-run Miike mines. It chartered boats and transported coal on its own account. In 1878 it bought a steamship, and in 1888 it bought the mines. Mitsui Bussan became an industrial carrier and the shipping section was established in 1898. The section expanded to become the Shipping Department and moved to Kobe in 1904. The company then owned 9 ships aggregating 36,752 dwt, and on the eve of World War I the fleet totaled 15 ships with 74,635 dwt, increasing to 30 ships totaling 127,141 dwt in 1919. The third general manager, Teijiro Kawamura, expanded the business of the department during World War I; in 1914 it began a tramp service carrying the company's own cargo and that of other companies. In 1917 it constructed a shipyard and set up the shipbuilding department and in 1920 it opened a semi-liner service from Dalien via Kobe to Seattle, whereby a liner service operated on outbound voyages but on the return voyage, owing to insufficient cargo at Seattle, ships had to stop and collect cargo at other ports.

Mitsui Bussan's Shipping Department built two sister ships in 1924. One was equipped with reciprocal oil-burners, the other had diesel engines and was the first oceangoing diesel ship in Japan. The department put these ships on the North American route and compared their performance. Akagisan Maru, the diesel ship, proved superior, and Mitsui concluded a manufacturing and marketing license agreement with Burmeister and Wain Co. (B & W), who had manufactured the engine, in 1926. In 1928 Mitsui opened a Bangkok route, in 1931 a Philippines route, in 1932 a Dalien to New York route, and in 1935 a Persian Gulf route. From 1933 the Shipping Department became known as Mitsui Line. In 1937 it owned 35 ships aggregating 227,044 dwt. The shipbuilding department was separated off as the Mitsui Tama Shipyard in 1937, and in 1942 the former Shipping Department too became a separate company, Mitsui Steamship Co., Ltd. (MS). It was capitalized at ¥50 million, and Takaharu Mitsui was elected chairman.

During World War II, and after the war, all MS ships were under the control of the government. When Japan lost the war in 1945, only 17 of MS's vessels were left, increasing to 22 vessels totaling 77,459 dwt when MS re-acquired operations that had previously been chartered out to the Civilian Merchant Marine Committee (CMMC). MS then began a vigorous expansion of its fleet and routes to re-establish its prewar network, and went so far as to apply to the FEFC. When its application was rejected, MS placed outsider--non-conference-member--ships on this route in 1953. After a long struggle, the conference attempted to resolve the issue politically and the British ambassador openly criticized Japan's shipping policies in 1955. Japan joined the General Agreement on Tariffs and Trade (GATT) the same year, and Japan's minister of transport was anxious to settle the issue without dispute. The final proposal of the conference, through the mediation of the minister of transport, contained extremely harsh conditions which MS had to accept, one of which was that MS could only join the FEFC if it operated under the management of NYK for several years. The 39-month battle was over, and MS began placing ships under the auspice of NYK in 1956. Five years later, MS at last joined the conference.

MS constructed 38 vessels between 1950 and its merger with OSK in 1964, and its operating tonnage was the largest in Japan. One of its ships, Kinkasan Maru, was the first bridge-controlled ship in the world. MS planned to rationalize its crews and at the same time improve the working conditions of engineers. It cooperated with Mitsui Shipbuilding & Engineering Co., a direct successor of Mitsui Tama Shipyard, and designed innovatory bridge-controlled ships. The Kinkasan Maru was delivered in 1961 and MS placed it, along with another bridge-controlled ship, on the New York route, which was re-opened in 1951. Besides the New York route, MS operated westbound and eastbound routes around the world, a Central and South America route, a west Africa route, and a Great Lakes route. In 1964 MS owned 45 vessels aggregating 737,098 dwt. However, MS's performance was disappointing from 1950 until the OSK merger in 1964, when it was capitalized at ¥5.5 billion and had debts of ¥26.7 billion.

Soon after the shipping industry reorganization of 1964, in which Japanese shipping companies were restructured into six groups, world shipping moved toward containerization. Mitsui O.S.K. Lines, Ltd. (MOL), formed by the merger of OSK and MS, began container services on the California route, joining a space-charter consortium of four Japanese operators. The first container ship, MOL's America Maru, sailed from Kobe to San Francisco in October 1969. Containerization spread to other routes, including the Australia route, with NYK and Yamashita-Shinnihon Steamship Co., in 1970; the north Pacific route, with five other Japanese companies, in 1971; and the Europe route, as part of the TRIO Group consisting of MOL, Nippon Yusen Kaisha, Overseas Container Lines, Ben Line, and Hapag-Lloyd, in 1971. On the New York route and Mediterranean routes a container service began in 1972.

The other trend was toward specialization. Both OSK and MS had ore carriers, and after the merger MOL held the largest share of the Japanese ore market. The Yachiyosan Maru, at 123,800 dwt, built in 1970 under a cargo guarantee from Nippon Steel Corporation, was the largest ore carrier in Japan at that time. MOL built Oppama Maru, the first car carrier in Japan, in 1965 under cargo guarantee from Nissan Motor Company. MOL could not carry cars at a low freight rate because it had to stick to the conference rate. Nissan therefore established the Nissan Motor Car Carrier Co. in 1970 to operate the Oppama Maru and transport its cars. Based on this model, MOL and Honda Motor Co. established the Act Maritime Co. in 1973 to carry Honda cars to the United States.

Business results improved after the merger, and the loss brought forward was written off in 1966. The company was recapitalized at ¥20 billion in 1968, and at ¥30 billion in 1972. The owned fleet increased to 152 vessels, totaling 6.6 million dwt in 1974, and the operating fleet--owned vessels and time-chartered vessels--numbered 291 vessels, totaling 10 million dwt.

The U.S. gold embargo in 1971 and the advent of a floating world monetary system was a severe blow for MOL. It changed its financial strategy, keeping more funds in U.S. dollars and in other currencies. More serious was the 1973 oil crisis. MOL immediately canceled tankers under construction and recorded its best business performance since the merger; freight revenue topped ¥327.5 billion. Soon afterward, however, results deteriorated rapidly and the downslide continued until 1978. MOL made great efforts to curtail costs, and simultaneously increased the size and number of container ships. Containerization increased on routes between industrially advanced and developing countries, and huge investment was needed to finance this expansion. The development of intermodal transportation on the North America route also began, and MOL introduced a Mini Land Bridge (MLB) service in 1972, using rail transport as well as shipping to reduce transit time, to compete with the U.S. shipping company Sea-Land, extending the service to IPI (Interior Point Intermodal) service in 1980. Around the time that the MLB service started, the world trade structure began to change and in 1979 about 60% of general cargo from Asia to the United States came to be loaded at newly industrialized countries (NICs). MOL reorganized its routes, changing its starting ports for U.S. voyages from Japan to Hong Kong, Taiwan, and other NICs, while shipping companies in the newly industrialized countries captured this new demand and branched out into the Pacific routes. The competition in sea transportation increased and MOL began a direct container service between the Far East and the west coast of North America in 1982. MOL invested huge capital to consolidate these services and to establish a service network in the United States.

As a countermeasure against rising oil costs MOL built energy-efficient ships, cooperating with Mitsui Engineering & Shipbuilding. Awobasan Maru, delivered in 1981, was the first ship incorporating innovations that reduced fuel consumption by 30%. In 1974 MOL established the Saudi Arabian Shipping Co., Ltd. (SASCO) and Arabian Marine Operation Co. Ltd. (AMOCO) as joint ventures with the prince of Saudi Arabia in Jeddah. SASCO is the shipowner, while AMOCO manages tanker operations. MOL hoped that this joint venture would give it an advantageous status in any future nationalization of oil, but at first the performance of these companies was not good, and AMOCO acquired the rights to bunker supply in 1977. Two years later the second oil crisis occurred and MOL was able to get a stable bunker supply.

Personnel expenses increased after the first oil crisis, and the yen was revalued. These changes hit MOL heavily as a large part of its income was in U.S. dollars. To make itself more competitive, MOL reduced the number of its own vessels and increased the number of flag of convenience (FOC) ships; its own ships fell in number from 127 in 1975 to 82 in 1982, and the number of employees at sea from 3,127 to 2,233, while freight revenue increased from ¥282 billion to ¥476 billion over the same period. MOL also built highly rationalized ships in cooperation with MES, which would require a crew of only 18, the minimum number accepted by the Seamen's Act, while other ships required 22 or 24. The first super-advanced ship was the Canberra Maru, delivered in 1979, which was put on the Australia route.

In 1970 MOL established Mitsui OSK Passenger Co., Ltd. (MOP), with the reorganization of JES. MOP has three passenger ships. The company was the only one in Japan to operate an oceangoing passenger service at that time, but later in the 1990s a few Japanese shipping companies entered this market to cope with the boom in traveling by sea.

In 1984 the Maritime Act of the United States was revised and the mandatory independent action clause was introduced. This gave shipping companies the right to introduce a discount tariff if registered at the Federal Maritime Commission. The conferences on North American routes became extremely weak and freight rates on the routes dropped sharply. Every route between the Far East and the United States made losses and MOL's business performance deteriorated again. Once more, MOL worked hard to curtail expenses and establish greater competitiveness on these routes. In the same year it decided to enlarge its container terminal facilities at Los Angeles, and also installed its own container terminals at Asian ports, including Kaohsiung.

MOL also made great efforts to reorganize operations on the Pacific routes, dissolving the consortium of six Japanese companies. In 1985 it began a two-company consortium with Kawasaki Steamship's K Line service (KL) on the Japan/Pacific southwest route, and with East Asiatic Co. (EAC) on the Far East/Pacific southwest route. It also decided to start a three-company consortium with KL and EAC on the Pacific northwest route. On each route it began a weekly service with newly built large container ships. The first such ship, Asian Venture, was an FOC ship at 1,960 20 feet equivalent unit (TEU), indicating the number of containers loaded, and the main ships placed on this route became FOC ships after they were launched in 1984. Moreover, MOL began operating a double stack train service between Los Angeles, Chicago, and Columbus, Ohio in 1985 and extended it to New York in the following year.

The New York route became the most competitive because of this trend toward intermodal forms of transport. NYK, Yamashita-Shinnihon Steamship Co.--later merged with Japan Line to establish Nippon Liner Systems for liner business and Navix Lines for tramp business--and MOL began a joint operation service in 1986 and put on it six high-speed large vessels including MOL's Alligator series ships. To improve services, MOL introduced a computer booking system in 1984 and enlarged its online system to cover the United States and the Far East in 1986. This route, however, became lossmaking after 1986, seriously affecting the company's performance; MOL did not pay dividends between 1987 and 1989.

In 1983 the import of liquefied natural gas (LNG) on Free on Board (FOB) conditions began as part of the diversification of Japan's energy resources, and MOL, NYK, Kawasaki Steamship, Chubu Electric Power Company, Incorporated and other Japanese electricity and gas companies jointly established two specialized companies, Badak LNG Transport Inc. and Arun, to transport LNG from Indonesia. These two companies operated seven LNG ships, constructed by MOL and other shipping companies. MOL also took delivery in 1983 of the Kohzan Maru, Japan's first large-sized methanol carrier, and transported methanol from Saudi Arabia to Japan. Japan's exports of industrial plant grew at that time and modularization began. MOL was interested in the transportation of massive plants and took delivery of five specialized ships, including the Atlas Maru, equipped with a 600-ton capacity derrick, one of the largest in the world. Plant exports began to decline in the late 1980s and these special ships were mostly sold or changed their flags.

MOL's financial activities became more international after the first oil crisis. The company issued corporate debentures and warrant bonds on the Swiss capital market. Shareholders' equity was ¥57.36 billion, and net income ¥5.94 billion in 1991. In the same year, the number of directly owned vessels was 54, aggregating 4.15 million dwt, and there were 296 operating vessels, aggregating 13.43 million dwt.

Principal Subsidiaries: International Energy Transport Co., Ltd. (45%); International Marine Transport Co., Ltd. (58%); Mitsui OSK Passenger Line Co., Ltd. (51%); M.O. Seaways, Ltd. (99%); International Container Terminal (92%); The Shosen Koun (62%); Trans Pacific Container Service (90%); Japan Express Co., Ltd. (Kobe) (86%); Japan Express Co., Ltd. (Yokohama) (81%); Blue Highway Line (25.4%); Kusakabe Steamship Co., Ltd. (80%); Mitsui OSK Kogyo Kaisha, Ltd. (79%); Euromol B.V. (100%); MOL International S.A. (100%); Orange Finance Ltd. (100%); Arabian Marine Bunker Sales Co., Ltd. (90%).

Further Reading:

  • Tatsuki, Mariko and Goshi Yamamoto, The First Century of Mitsui O.S.K. Lines, Ltd., Tokyo, Mitsui O.S.K. Lines, 1985.
  • Nakagawa, Keiichiro, Tomohei Chida et. al., Sogyo Hyakunen-shi, Tokyo, Mitsui O.S.K. Lines, 1985.

Source: International Directory of Company Histories, Vol. 5. St. James Press, 1992.