The major Japanese carriers NYK, MOL and K Line agreed to merge their container divisions, forming a brand new shipping company. The combined company will operate a fleet of 110 vessels with 1.4 million TEU, making it the fifth largest container line in the world. The decision was taken among crisis in the industry with record freight rates, reorganization of the world market and continuing economy delay. With the establishment of the new company, NYK will hold 38% stake, while K Line and MOL will hold 31% each. If it gets regulatory approval, the new joint venture should start business on April 1 next year.
“Most container shipping companies are making a loss. The three Japanese companies have made efforts to cut cost and restructure their business, but there are limits to what can be accomplished individually. Also, in order to keep a membership of a global alliance continuously, it would be necessary to have above a certain business scale level”, says the official statement of the shipping operators. “Furthermore, the decision to cooperate in the East/West trades made in May 2016 by the creation of THE Alliance was also a factor”, adds the statement
With the merger of container division of the three major Japanese shipping operators is expected they to realize millions of dollars of savings on vessel network costs. Also with the start of the new joint-venture company, probably will be reorganized the routes and service, providing higher efficiency and flexibility. The three operators will help form THE Alliance next April, but probably will enter into the vessel sharing agreement with new merged company.
The merger of the major Japanese carriers NYK, MOL and K Line comes after series of consolidations into the sphere of container shipping. Earlier this year CMA CGM acquired APL, while currently Hapag Lloyd is merging with UASC. Following the new mergers and bankruptcy of Hanjin Shipping, the number of global carriers reduced to just 13, but the total container capacity continue to be at the highest value.