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MOL President Akimitsu Ashida's 2007 New Year Message

January 04, 2007

Recommit Yourself to Safe Operation.

Regain the Trust of Our Customers by Ensuring Safe Operation

Season's greetings to everyone on shore and at sea. Despite our financial success, last year was still a regrettable one for the MOL Group as a result of four serious vessel incidents occurring in succession. I am sincerely sorry not only for causing so much inconvenience to customers and local communities affected by these incidents, but even more so for the loss of seafarers who are valued members of the MOL family. The feeling of grief and heartbreak, while certainly great, is not over, but ensuring the safe operation of our vessels is intensively the MOL Group's top priority. Sontoku Ninomiya, an agricultural reformer during the Edo Era, once said, "Business without ethics is a crime." With that same spirit, we must continually strive to promote the safe operation of our fleet. As we greet the New Year, let me express our wholehearted commitment to ensuring the safety of our vessels and regaining the trust of our customers, our shareholders, and our society.

Therefore, I have directed Deputy President Hidehiro Harada, the chair of the Emergency Task Force for Enhancement of Operational Safety, to analyze the four vessel incidents from all aspects, and to formulate strong new countermeasures designed to improve the safety of our vessel operation. The Task Force recently made a report to the Operational Safety Committee, which I chair. Since majority of their proposals match my deduction, I have ordered the immediate implementation of many of their proposals by the appropriate steering committees and the Marine Management Division.

"Safety First" is not just a mere slogan. It must be the most important criteria in our decision-making. Safety should always be the primary concern. Constantly challenge yourself to think: safety". Do you rely excessively on the use of paper circulation and manuals to make decisions, without using your own five senses? Do you focus largely on the minor details of your job while paying little or no attention to the most important issue --- safety?

Always be alert for any sense of danger

Never ever overlook a risk that could result in an accident. This is unsubstantiated, but it is entirely possible that some accidents could result from climatic conditions associated with global warming that we are not used to. In recent years, we have faced some highly unusual weather. We need to pay more attention to these events as part of our safety efforts. What's more, vessels are larger than ever before, so the risk of danger has increased, and the impact of any incident has been magnified as a result.

Furthermore, assuming the amount of time and energy spent preventing an accident from happening is "1," then the amount of time and energy used to respond to and deal with the accident after it occurs is more than 100 times that. Most certainly, we could more effectively use that huge amount of time and energy to focus on the forward-looking aspects of our business.

I'm sure that we can operate our fleet safely, and I don't think we have any problems that we cannot solve, if we approach it with a "Can-Do" spirit. Let's work in earnest on this important mission with a "Can-Do" spirit - operating safely and preventing accidents - by all MOL Group management, and employees.

Staying on Course for Growth --- Looking at the Next Mid-term Management Plan

Based on our goal of safe operation, I would like to discuss the direction our group should take in coming years.

First, let's look at our performance for fiscal year 2006, which ends in March 2007. This is the last year of the MOL STEP three-year mid-term management plan which started in FY2004. Our entire group has pushed ahead, and thanks to everyone's hard work to build sales and reduce costs, we expect to achieve nearly the same results as last year and the year before last, in spite of some un-expected changes in the market and business climate. We will pursue our growth strategy in step with continued growth in our markets, under the next mid-term management plan starting in April of this year

Dramatic Growth in Ocean Transport Volume

I believe demand for global ocean transport will continue growing. Actually, 2004 was the landmark year in which the ocean cargo trade per person topped one ton and the world trade volume totaled 6.5 billion tons with the world population of 6.4 billion people. By comparison, ocean cargo trade in 1965 was 1.7 billion tons and world population totaled 3.3 billion people. So we forecast that ocean trade volume will surpass population growth. The world's population is estimated to reach 9 billion people in 2050. That means, if ocean trade grows at an average annual rate 2.5 times that of population growth, as in the past 20 years, worldwide ocean trade in 2050 will total about 15 billion tons.

It's been said that "the world has been united twice in the past." The first time was when the entire world was covered by liner service shipping networks and telecommunication networks from 1840 to 1850. And the second time was 1970 when containerships, 747 jumbo jets, and computers appeared. Three decades have passed since then, and a world economy, a truly global economy, has evolved as a result. Thirty years ago, containerships could transport 800 TEUs at a time, but now ships that can handle more than 10,000 TEUs have been launched. What's more, connections among economic zones have become stronger. Economic zones are being united rather than closed. Some people believe logistics will be more rationalized by the evolution of information technology (IT), but actually logistics will not disappear even as IT evolves. Instead, the development of IT will stimulate more opportunity logistics services, increasing overall business volume. These circumstances present a host of opportunities for the MOL Group.

Ocean Shipping --- the Driving Force of World Economic Growth

One of the reasons why ocean trade volume will increase is the growing distance between producers and consumers due to global changes in the division of manufacturing industry. Consider the petroleum industry as one example. The United States relies on imports for two third of its domestic petroleum consumption. China became a net petroleum importer in 1994, but the United States reached that milestone 50 years earlier in 1944, and has continually increased its import volume ever since. In the future, China and the United States will continue to increase their imports. Speaking of product transport, Asian regions including China have become the world's factory. And it is expected that product imports from China and other Asian regions to North America and Europe, which now represent 75% and 58% of total consumption respectively, will increase to 80% and 65% in 2009.

World GDP in 2005 was US$44 trillion. Trade accounted for 23%, most of which was transported by sea. That means the growth of trade is a key factor in promoting affluence around the world, and ocean transport supports that expansion. And that is why I think ocean shipping can continue to be a growth industry supporting the growth of the world's economy. The MOL Group plays a vital role in global ocean shipping, and aims at further growth in step with the expanding market. The next mid-term management plan, which will be introduced in March, will be a blueprint of our strategies to achieve that aim.

Placing Value on 3Gs - Growth, Group, and Global

To achieve safe operation and plot the course of our growth, needless to say, the most critical element is our people. Therefore, all MOL Group management and employees must be highly motivated and highly skilled in their business. There is a phrase "When there is ch'i (utmost sincerity and concentration), it can go through even gold and stone."* This means nothing is impossible if we have the will. If all of us have the right attitude, we can solve any problem. This year, for example, we will start operating an in house training vessel exclusively to provide practical onboard training of MOL Group seafarers, as the first step to building a thorough awareness of safety among new seafarers. And we built the new MOL Kakio Institute in Tokyo as part of our move to enhance training and education of onshore and seagoing employees. We will accomplish our goal of restructuring and improving our systems for the safe operation of MOL Group-operated vessels by March, and proceed with the new mid-term management plan.

I specified Growth, Group, and Global (3G) as key words for the future when I was inaugurated as President. The driving power of these 3Gs is people. They remain just as important now. We will fully utilize the combined expertise, knowledge, and experience of Group personnel, including multinational maritime officers and engineers, and continue to grow around the world.

Finally, I pray for the safe operation of all MOL Group vessels, and hope that 2007 will be a healthy, happy, and prosperous year for you and your families.

*A concept in the teachings of Chu His (1130-1200), China.