Tuesday, April 10, 2018

New Container Company Needs to Shed Old Brands and Seek Own Identity for Shippers of Freight

ONE Must Build A Unique Image for Itself
Shipping News Feature
JAPAN – WORLDWIDE – The inception of the Ocean Network Express, otherwise known as the ONE container freight alliance between the three major national carriers of Japan has set an interesting precedent in a section of the global logistics industry which has witnessed an onset of hitherto unforeseen co-operations between the largest of the box carriers.

Driven by a need to cope with overcapacity in a fluctuating market the problem for the container lines has always been the need to predict world trends in trade, years before they actually occur. When Maersk came out of the blocks early with the announcement of the Triple E series in February 2011, the world’s largest container fleet scheduled 10 new vessels of a size never before envisaged.

Buoyed by ever rising tonnages these 18,000 TEU giants have since been surpassed in size by newbuilds from many of the other players in a bid to stay in the game. The ploy was almost bound to cause problems for some and, sure enough three years after that first Maersk ship was christened, in August 2016 we saw the collapse of Hanjin. It was within two months of the failure of the South Korean line that NYK, MOL and K Line announced they would be joining forces this year as the ONE operation.

Initially nobody was surprised but it turned out that this is no ordinary vessel sharing pact. ONE is actually a company in its own right, with the three Japanese operators as shareholders (MOL and K Line 31%, NYK 38%). No more it seems green crocodiles or winged lettering, the consolidation means the new entity with its 230 ships travelling under a new identity making it the sixth largest container carrier but, according to Alphaliner’s top 100 list, currently only holding a market share of 6.9%.

As from the start of this month the bright pink and white containers of the new company can be witnessed spreading around the globe, but online freight forwarder iContainers posed the question this week as to how ONE will face up to the challenge of abandoning three well known, and presumably oft respected, brands, in favour of a completely new and alien identity. Klaus Lysdal, Vice President of Sales and Operations at iContainers, observed:

“Each carrier has its own strengths and weaknesses. So the trick will be to carry over the strengths. Obviously, with three company cultures coming together into one there will be some values that will change. Approaches and protocols will have to be set as the trio look to take on a brand new identity. This will cost them some clients, especially those who enjoyed a certain way of working with a certain carrier. The industry will be waiting for the operational and financial results of this merger. But at first look, it's safe to say that it makes a lot of sense for the three to come together and join forces instead risking it on their own.”

The formation of the new line was $3 billion deal and through the merger, ONE is reportedly expected to cut around $440 million in costs in its first fiscal year of operations. Another positive may be the somewhat dubious reputations which all three owners have developed over the past few years, particularly with regard to their automotive shipping operations, may now be put aside. All three have been very heavily fined by worldwide regulators for cartel and antitrust operations when conspiring together to the disadvantage of customers.