Wednesday, May 31, 2017

Details Released Concerning the ONE Shipping Alliance

Japanese Conglomeration takes Another Step
Shipping News Feature
JAPAN – The proposed joint venture between Japan's three largest container shipping lines, Kawasaki Kisen Kaisha (K Line), Mitsui O.S.K. Lines (MOL), and Nippon Yusen Kabushiki Kaisha (NYK) have announced details about their possible collaboration, including the name under which the three will operate. The ‘Ocean Network Express’, or ONE as the shippers will undoubtedly refer to it as, aims to address the industry-wide problem of overcapacity in the ocean freight market by combining its container shipping business and its worldwide terminal operations, excluding those in Japan, in order to maintain any semblance of a competitive advantage.

Scheduled to launch at the start of April 2018, the new entity will establish a holding company in Japan with the global headquarters based in Singapore. Additionally, regional headquarters will be set up in Singapore; Hong Kong; London, UK; Richmond, Virginia, US; and São Paulo, Brazil.

According to K Line, MOL, and NYK, 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. The ONE (a name marginally better than the THE Alliance, though about as un-Googleable) would operate a fleet totalling 1.4 million TEU, with a 7% of the global market share, placing the combined entity as the sixth largest container shipper in the world, behind the recently bolstered German shipping line Hapag-Lloyd, which last week completed the merger deal with UASC.

The deal is still subject to antitrust approvals, with Singapore having already given it the go-ahead but with the American Federal Maritime Association (FMC), having no bearing over the final decision of the US authorities, expressing its concerns of a merger without a merger arrangement.

If approved, MOL and K Line will each hold 31% shares with NYK having the remaining 38%. The deal applies only to the container operations, not their RoRo auto shipping arms nor any of their respective short sea and domestic, oil and gas carrying or dry bulk divisions or heavy lift and logistics operations.