It has recently been announced that three of Japan’s largest and best-known shipping groups, namely K-Line, MOL, and NYK, will be merging. The merger is set to take place in mid-2017, with the joint service offering being fully operational by the 1st of April 2018: a slow and steady collaboration about which all members of each group are excited about.
Kawasaki Kisen Kaisha (K-Line), Mitsui OSK-Lines (MOL) and Nippon Yusen Kaisha (NYK) are all well-known and each respected in their own right. According to those involved in the merger, the reasons for the venture include current low oil prices, slow cargo demand, and an oversupply of trade capacity. However, those were not the only driving forces behind the decision. The choice made to cooperate in the East/West Indies in May 2016 by the creation of THE Alliance also played a role. Along with Hapag-Lloyd, Yang Ming, and Hanjin Shipping (which has recently gone bankrupt), all three of the soon to be merging Japanese lines are part of the new THE Alliance.
The merging carriers also mentioned that while container shipping will remain the heart of both companies’ operations, the business will be reshaped into a new joint venture as an equity-method affiliate. The largest shareholder of the newly merged business will be NYK, which will be taking a 38% stake, whereas MOL and K-Line will each receive 31%. With most of their container shipping operations sitting dangerously in the red, the three companies hope that the merger will be a good business decision and that they can create something that resembles their original success.
According to a statement made by the new partners: “Although growing modestly, the container shipping industry has struggled in recent years due to a decline in the container growth rate and the rapid influx of newly built vessels. These two factors have contributed to an imbalance of supply and demand which has destabilized the industry and has created an environment that is averse to container line profitability”.
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