President Akimitsu Ashida’s Speech
on the Anniversary of MOL’s Founding

April 01, 2009

On the occasion of Mitsui O.S.K. Lines (MOL) 125th anniversary, we are pleased to bring you a message from our President, Akimitsu Ashida.

"Every Cloud Has a Silver Lining"

It is my great pleasure to commemorate MOL’s 125th anniversary, together with all of you from the MOL group companies.

While the average company's lifespan is commonly said to be around 30 years, MOL has grown and evolved over a period four times greater. The world economy is currently in what has been called a once-in-a-century crisis, but in its lifetime MOL has overcome many serious ordeals and difficulties - the Great Depression of the early thirties, World War II, the oil crisis of the seventies, the sharp appreciation of the Japanese yen after the Plaza Accord in 1985, and others. Yet, here we are today celebrating the 125th anniversary of the company’s founding. It seems to me that now is an opportune moment to reflect on the severe challenges and battles our predecessors faced, and remember how they dealt with those ordeals and overcame the difficulties they were confronted with.

Gratitude for our Predecessors' Dedication

Since the outbreak of the financial crisis last year, the issue of employment has taken center stage across the world. MOL suffered extreme employment turmoil just over 20 years ago. Employees who joined MOL more recently may not be aware that we suffered terribly from the hike in dollar-denominated manning costs for Japanese seafarers, due to the sharp appreciation of the yen triggered by the Plaza Accord in 1985. Under these circumstances, MOL reluctantly introduced an "Emergency Employment Adjustment Plan" and promoted the internationalization of its seagoing manning force. As a result, over 3,000 Japanese seafarers (60% of our total number of seafarers at that time) left MOL to save the company collapsing. Thanks to this act of extraordinary sacrifice and dedication by our predecessors, MOL was able to shift the composition of its seafarers to one that was more multinational and recover its global competitiveness. This lay the foundation for our subsequent growth. It is with sincere gratitude that I, even now, remember the selfless action of those who worked so hard for the company and were prepared to make the ultimate sacrifice of leaving to ensure the survival of the company. I will never forget the trouble we experienced 20 years ago, and the memory of that time continues to spur me in my full efforts to enhance MOL's foundation.

Cash-flow is as important as Profit

With our healthy financial base achieved by strong and stable profits over recent years, in the new fiscal year starting today I would like to maintain our profits at a level which ensures we can continue to stand strong and ride out the tough business climate we are in. To achieve this goal, we must respond nimbly to market movements and changes. Under the current tight financial market conditions, we must pay closer attention to cash-flow. While our company profit level was minimal prior to year 2000, cash-flow was almost balanced, with the replacement of existing vessels being a major facility investment. After year 2000, when our profits increased, pushing up our cash-flow, we were able to embark on a major fleet expansion plan using the cash generated by these profits. By doing this, we were able to dramatically enhance the fundamental strength of our business operations. However, in order for us to continue receiving the vessels we contracted before the current economic collapse, we must maximize operating cash-flow and keep our finances in good shape. I would ask all of you to keep searching for ways to improve our cash-flow as you carry out your daily duties, paying particular attention to the improvement of credit control and the earliest-possible collection of accounts receivable.

The Entire World is Our Local Market

If we look only to the Japanese market as our local market (i.e. cargo transportation to/from Japan), we can expect domestic demand to decline during this recession. However, the business field MOL operates in is worldwide, and we must take the approach that the entire world is our local market at arm’s length. In such a large market, opportunities for MOL's growth and expansion abound. In particular, there remains huge potential for cargo transportation in regions such as China, India, the Middle East, Central and South America, and Africa. These markets must be regarded as part of our local market, or “domestic” demand, and handled accordingly in keeping with the global nature of our business activities. As world seaborne trade increases, so too will MOL's "domestic" demand. The key to our growth strategy is to seize, without fail or hesitation, opportunities as they arise.

In order to take advantage of global "domestic" demand, we must adopt a more globally competitive business system. While the globalization of MOL seafarers is already well established, we need to make further efforts to enhance our global administrative structure. There is no doubt that Tokyo should and must continue to function as the company's headquarters. At the same time, when dealing with global "domestic" demand, it is essential that daily operations (business activities, back office operations, etc.) be performed at the most optimum location by the most competent staff which give the best cost performance.

When the international shipping industry returns to the growth track, we can expect the lineup of major players to be quite different from that of today. Only shipping companies operating with reinforced cost competitiveness will be able to survive. To prepare for the new circumstances we find ourselves in, we need to remain one step ahead of the competition and continually search for new and bold ways to strengthen our competitiveness.

"Adversity Makes A Man Wise"

I believe that MOL employees will rise to the challenge and become stronger and more competent as a result of the severe business climate we face. Although the economic crisis will require a substantial effort to overcome, it also presents a precious opportunity for young staff to enhance and hone their skills. As the proverb says, "adversity makes a man wise".

For all of you working in the organization, I would like to stress the importance of maintaining good communication between all team members to maximize results. I would like managers to keep in mind that it is essential for them to consistently follow up on instructions given and provide feedback and guidance to their staff if they are to ensure the objectives of a plan are reached. An excellent plan is meaningless if it is objectives cannot be achieved. It is not unrealistic to say that the success of a project is 30% down to planning and 70% down to follow up of instructions by managers. Please do not be content to just give instructions and directions and leave it at that; become involved and follow up the instructions to check progress and identify problems. In addition, good leadership means being prepared to revise initial plans and to be flexible should circumstance or conditions change. I would like all staff to avoid taking a passive approach to their work by simply awaiting instructions and directions, but rather be proactive, communicating, revising, discussing, and so forth. If we are to remain a world-leading shipping company, we must continue taking measures to enhance the ability of our employees and create a more open atmosphere which facilitates better and closer communication between all employees - executives, middle management and staff.

Doing What Needs to be Done is the Basic of Safe Operation

At the end of March, Japanese escort ships joined a multi-national force of naval vessels deployed off Somalia to carry out “anti-piracy” operations. This decision was made partly in response to our repeated petitions to the Japanese government for action and a realization by the government of the seriousness of the piracy problem in this area. Like this example, a commitment by all individuals at each position in the organization to not accept doing nothing but to do what needs to be done without delay is the basic of safe operation. Especially in the current recession, where the “survival of the fittest” is very much at play, the highest levels of safety and quality in the management and operational sides of our transportation services are indispensable if MOL is to forge ahead of its competitors and lead the international shipping industry. To avoid accidents, even in this difficult time when you may be tempted to take short-cuts, it is important that you renew your determination to ensure operational safety at all levels and for all employees.

"Every Cloud Has a Silver Lining"

Now, we are facing an economic crisis such as none of us have ever experienced. But there is a saying that "every cloud has a silver lining." Global seaborne trade has fallen, but the world economy will certainly recover and ocean shipping will return to growth sooner or later. Our company has moved swiftly to adjust its fleet size as an emergency response to the current declining cargo traffic. While our initial fleet plan to reach 1,200 vessels by 2012 will now be slightly delayed, we are continuing our preparations to expand ship management capabilities to accommodate our original plan. Working together, we can overcome this difficult period and place ourselves in a position to seize new opportunities for growth as and when the economy turns around.

Finally, I pray for the safety of all MOL group vessels, and wish everyone from around the world who are part of the MOL Global Team success and prosperity in the years that lie ahead of us.