K Line, MOL, NYK Integrates Shipping Business

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Japan’s major container shipping companies jointly setup new company

In a major news development, Japan’s major container shipping companies Kawasaki Kisen Kaisha (K Line), Mitsui O.S.K. Lines (MOL) and Nippon Yusen Kabushiki Kaisha (NYK) have created a holding and operating company for integration of their container shipping businesses, including setting up of a worldwide terminal operation business outside Japan as well.

Ocean Network Express:

The new Tokyo based holding company will henceforth be known as Ocean Network Express Holdings and the Singapore based company will be known as the Ocean Network Express.

The process for approval has been initiated by the concerned companies and is expected to be completed before April 1, 2018. The process will comply with all the rules of competition law.

Mergers on the rise:

Due to decrease in demand for cargo shipping in recent years, increasing number of companies have moved towards mergers and acquisitions. Whereas the tonnage supply has been increasing steadily because of delivery of new vessels. The balance of the supply and demand has been disturbed due to this phenomenon.

Mergers to counteract issues:

The three Japanese companies K Line, MOL and NYK  have decided to combine their businesses due to low oil prices, sluggish cargo demand, and oversupply of trade capacity, which has led to container freight rates reaching historic lows.

The firms have made conscious decision to slash costs and restructure their business, but are constricted by certain limits.

Benchmark for exceptional service:

The merger company has aimed to provide an exceptional service and meet the demands of customer requirements by development of an extensive network spanning over 90 countries.

Ocean Network Express will operate approximately 240 vessels, including 31 ultra-large container ships such as the world’s largest 20,000TEU class.

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Source: Ship Technology

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