3 Japanese carriers form a joint venture for their freight business

By ussa-login on Monday, November 21, 2016 - Blog

Japan’s three shipping groups, K-Line, MOL, and NYK, have announced that they will be merging their shipping and overseas terminal operations. They plan to join forces on the 1 July 2017 and the commencement of the decision will take place from 1 April 2018.

The three Japanese firms, Kawasaki Kisen Kaisha (K-Line), Mitsui OSK Lines (MOL), and Nippon Yusen Kaisha (NYK), said that the decision to unite came because of low oil prices, slow cargo demand, an oversupply of trade capacity, and container freight rates at dangerous lows.

The global container shipping trade that is extremely slow, combined with increased fleet sizes, have caused freight rates to fall tremendously, beginning a wave a consolidation in the container industry.

As these three companies commence their joint venture, they will rank sixth in the world with a combined fleet capacity of 1.4 million TEUs,and a 7 percent global market share.

Carriers have been booking heavy losses as freight rates have fallen without recover due to overcapacity and heavy competition. The three Japanese Carrier, which belong to the Alliance, Hapag-Lloyd and Yang Ming Line, expect to save $1.1 billion in costs by merging.

NYK, MOL and K-Line have no plans to combine any other parts of their businesses, which also operate dry bulk ships, oil and gas tankers, and car carriers.

The aim of K-Line, MOL, and NYK 

The 3-shipping company’s joint venture will establish unity in the following areas:

  • Creation of more synergy and enhancement of their operational efficiency by integration of each company’s best practice.
  • Achievement of the economy of scale by combining three companies’ business.
  • Profit stabilization by the accomplishment of the synergy of approx. 110 B JPY/year.

By strengthening the global organization and enhancing the liner network, they will be able to provide higher quality services and unlock new value in order to exceed their clients’ expectations and deliver a better service to its loyal shippers

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