Sanko Steamship Company , Ltd

Abstract

Sanko Steamship Company, Ltd., one of the three largest sea transport companies in Japan, was suffering through a long spell of financial crises with chronic deficits beginning as early as 1978 (see Exhibit 1). Its current account deficits

in the 1982 fiscal year alone (April 1982 through March 1983) amounted to 56 billion yen (or about U.S. $ 233 million) of its total sales of 264.7 billion yen (about U.S. $1,103 million). Starting in early 1983, however, Sanko Steamship

became an instant star of the press, with every move of its top management being reported in industry newspapers almost daily. In the latter part of 1982, press reporters learned that managers of Sanko Steamship were busy contacting various Japanese shipbuilders to order handy-sized bulk carriers." Such contact between executives of shipping companies and shipbuiling companies was not newsworthy in itself, since annually the shipping and shipbuilding companies jointly plan the following year's order of new ships. What intrigued the reporters was the number of ships being ordered by Sanko. Generally a company of Sanko's size would order 4~6 bulkers in order to replace aging ships within its fleet. If the shipping company planned to increase the size of its fleet, it would order perhaps 10 or so new ships. This time, however, the information reporters were gathering indicated that Sanko was intending to order 40 to 60 bulk carriers, all in the range of 30, 000 to 40,000 dwt. The reporters' observations of Sanko's move were summarized in an article in the February 25, 1983 edition of Kaiji Press, the most authoritative newapaper of the Japanese shipping and shipbuilding industries.