Japan’s Biggest Shipping Companies are Merging for Efficiency

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  • Nippon Yusen, Mitsui O.S.K. Lines and Kawasaki Kisen Kaisha  are merging their container operations.
  • Merger creates the world’s sixth largest container shipping operation by capacity, is expected to start operating in April 2018.

On October 31, Three of Japan’s shipping companies, Nippon Yusen, Mitsui O.S.K. Lines and Kawasaki Kisen Kaisha said that they are merging a major portion of their businesses to survive.  The joint venture is expected to save more than 110bn yen ($1bn; £820m) a year.

The combined merged group’s fleet of 256 container vessels nearly hold about 7% of the world shipping market.

Globally the shipping industry is suffering from overcapacity and weak economic growth.

The president of one of the companies, Nippon Yusen Kabushiki Kaisha, said the groups faced bleak prospects on their own.  The shipping industry was shaken in August by the bankruptcy of South Korea’s biggest container shipping line, Hanjin Shipping, while other shipping companies in Asia, Europe and the Middle East have sought to protect themselves through mergers and acquisitions.

“If we don’t want the number of Japanese shipping companies to be zero, we need to create one strong, splendid company,” the president of Nippon Yusen, Tadaaki Naito, said at a news conference.

Shipping analyst Greg Knowler of IHS said the deal did not come as a complete surprise, given all carriers had reported some huge losses in the past past year or so.

“The quest for scale, and expectations that weak demand and excess capacity will continue for at least another two years, are driving the wave of consolidation that has swamped the liner shipping industry this year,” he said.

The three Japanese companies said that “by strengthening the global organization and enhancing the liner network, the new joint-venture company aims to provide higher quality and more competitive services in order to exceed our client’s’ expectations”.

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Source: NYK, BBC

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