Three Japan shippers to merge container lines
tokyo — Japan’s three biggest shippers agreed to combine their container operations to create the world’s sixth-largest box carrier, as the industry steps up consolidation this year amid a global turmoil in the sea-cargo business.
Nippon Yusen, Mitsui O.S.K. Lines and Kawasaki Kisen Kaisha, which are predicting operating losses this year, will create a company that will control seven per cent of the world containershipping trade, according to a joint statement in Tokyo on Monday. The combination will need to be approved by regulators in the European Union, US, China and Japan among others.
The global container industry has been in turmoil since the 2008 financial crisis brought trading to its knees. South Korea’s biggest line Hanjin Shipping filed for bankruptcy protection in August while others like A.P. Moeller-Maersk, the world’s biggest, have restructured to cut costs even as rates to move shoes and televisions stay depressed.
“It feels more of a merger for survival,” said Mikey Hsia, a trader at Sunrise Brokers in Hong Kong. “I see it as a reaction to Hanjin Shipping. The impact is that there won’t be any domestic competition. Now, the companies have to compete from a global perspective.”
The combined entity will be formed by July 1 and will have about 2 trillion yen ($19 billion) in sales and will be Asia’s biggest box carrier after China Cosco Shipping Corp. It expects to start operations by April 2018 and will have 256 vessels, according to the statement. Nippon Yusen will own 38 per cent of the merged entity while Kawasaki Kisen and Mitsui OSK will each hold 31 per cent.