Japan-based shipping company Mitsui O.S.K. Lines (MOL) is cutting its Capesize fleet by about 10% by cancelling some charter-in contracts and selling some dry bulk carriers it owns, within its drastic restructuring plan announced in February.

The company said it has already started returning chartered-in vessels based on agreements with business partners.

In April 2016, MOL is to commence selling its Capesize bulkers that have been deemed as surplus, with the estimated loss of JPY36.9bn (USD330m).

The move comes as the company recorded a major profit plunge for 2015 amid industry woes plagued by overcapacity.

The company restructured its internal dry bulk business divisions and established the new unit effective April 1. Under the measures, MOL is to dissolve its subsidiary MOLBC (MOL Bulk Carriers Pte. Ltd.) as of September 2016 and transfer its business operations from Singapore to Tokyo.

As of April, MOL said it would proceed with early cancellation of time charter-in contracts by MOLBC and transferring the charters to the company from MOLBC. MOL predicts an extraordinary loss to be JPY40.5bn (approx. USD360m) and JPY30.5bn (USD270m) from the said transactions, respectively. The new dry bulker and coal carrier divisions are to take over MOLBC's operations.

The early cancellations of Capesize bulker time charter-in contracts completed in March are to incur JPY9.5bn loss, according to MOL.

The company will record an impairment loss on fixed assets in its container shipping business as it decides to start selling some of its surplus vessels in April, with an estimated loss of JPY60.7bn and JPY1.2bn, respectively.

According to MOL, the reason for the reforms is a radically different business environment, with the dry bulker and containership freight rate market well below the company's previous assumption.

By restructuring its dry bulker and containership businesses, MOL says it would develop a business structure that generates stable profit.