Three Japanese lines become ONE

  • Three Japanese lines become ONE

    Three Japanese lines become ONE

    It was the best-kept secret in shipping, but now the name of the new Japanese container shipping giant is finally out.

    Kawasaki Kisen Kaisha, Mitsui O.S.K. Lines, and Nippon Yusen Kabushiki Kaisha have announced that their new joint venture will operate under the name Ocean Network Express.

    The much-anticipated announcement puts to rest myriad industry guesses and rumours over the name, which included San-Line, 3Js, and J3.

    The establishment of the new joint venture, which will integrate the three companies’ container shipping businesses — including worldwide terminal operation businesses, excluding those in Japan — was first announced in October 2016.

    NYK said on Wednesday that current plans were to establish a holding company in Japan, with an operating company to be incorporated in Singapore.

    In addition, regional headquarters of the operating company will be set up in Singapore, Hong Kong, the UK, US and Brazil.

    “The move will allow Ocean Network Express to better meet customers’ needs by providing high-quality, competitive services through the consolidation and enhancement of the three companies’ global network and service structures,” NYK said in a statement.

    The establishment of the new joint venture will be officially announced once all anti-trust reviews are completed, said NYK. The service commencement date for Ocean Network Express is April 1, 2018. A new website informs stakeholders about the joint venture.

    The momentous move that saw the three companies agree to merge their container shipping businesses last year was in keeping with an unprecedented round of consolidation and the formation of global alliances among ocean carrier heavyweights. The three Japanese lines are already members of The Alliance, along with Germany’s Hapag-Lloyd and Tawian’s Yang Ming.

    NYK, MOL and K Line will hold 38%, 31% and 31% stakes respectively in the new ¥300bn ($2.7bn) joint venture.

    The new entity will control a fleet of 1.4m teu, or about 7% of the world’s total capacity, ranking it sixth among the global liner shipping operators. Individually, each only has a market share of around 2% to 3%, too small to survive as global carriers in today’s container markets.

    NYK Europe chief executive Svein Steimler told Lloyd’s List in April: “This is going to result in major changes for the company. The challenge is how to restructure ourselves for the months and years to come. The ultimate goal is to end up with a functional organisation that mirrors existing demand in the market, running a business which is sustainable, making sure we’re a little bit smarter than our competitors.”

    Last month, Lloyd’s List revealed that NYK Line chief executive Jeremy Nixon is being tipped to run the new Japanese joint venture.

    Analysts in general hold positive views about the move, saying the merger will make it easier for The Alliance to reduce costs, reach common ground and bring over-ordering of tonnage under control.

    That said, they also pointed out that the combined operation between NYK, MOL and K Line was expected to encounter some challenges, including culture clashes, conflicts in terminal arrangements and resistance from risk-adverse shippers who want to have their cargoes divided over a few shipping lines.

    Alphaliner executive consultant Tan Hua Joo even noted that the three should shorten the period between the formation of the joint venture and the start date of joint operations, following the US Federal Maritime Commission’s decision to reject the three liner companies’ tripartite agreement on information sharing ahead of their merger.

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