Japan’s big three container shipping companies have agreed to establish a new joint-venture company to integrate their container shipping businesses.
After the resolution by the board of directors of each company held today, and subject to regulatory approval from the authorities, Kawasaki Kisen Kaisha (K Line), Mitsui O.S.K. Lines (MOL), and Nippon Yusen Kabushiki Kaisha (NYK Line) will establish the new company which will, besides the container shipping businesses, include worldwide terminal operating businesses excluding Japan.
The new joint-venture company would operate a fleet totaling 1.4 million TEUs, placing the new company as sixth in the market with approximately 7% of global share.
K Line and MOL, which will each hold 31 percent, and their compatriot NYK Line, which will hold the remaining 38 percent, plan to establish the new joint-venture company on July 1, 2017, while business commencement is expected to start as of April 1, 2018.
The parties opted for the move to ensure future stable, efficient and competitive business operations in the container shipping industry, which 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, destabilizing the industry and creating an environment that is adverse to container line profitability.
In order to combat these factors, industry participants have sought to gain scale merit through mergers and acquisitions and consequently the structure of the industry is changing through consolidation.