Japan’s three largest shipping companies yesterday agreed to merge their container businesses, as the industry struggles with overcapacity and weakened trade around the world.
The combination of the container operations — those of Kawasaki Kisen Kaisha, Mitsui OSK Lines Ltd and Nippon Yusen Kabushiki Kaisha — will create a company worth about ￥300 billion (US$2.9 billion), according to a news release.
It will operate 256 ships, representing about 7 percent of the global market by container volume.
Photo: Bloomberg
Kawasaki Kisen and Mitsui OSK are to each own 31 percent of the new company, while Nippon Yusen is to own 38 percent.
“The new joint-venture company aims to provide higher quality and more competitive services in order to exceed our clients’ expectations,” the companies said in the release.
The three firms said they expected combining their fleets would create about ￥110 billion in savings per year.
The deal is expected to be complete by July 1 next year, with operations beginning in April 2018.
The combination comes as the global shipping industry struggles with a soft global economy.
Shipping lines set plans a decade ago to buy more ships and expand at a time when trade looked strong, but the 2008 global financial crisis hit trade volume, and trade flows since then have been weaker than expected as Europe muddles through debt problems, the US experiences a soft recovery and China’s heady growth rates slow.
Shipping lines have explored consolidation and alliances as a result. However, regulators around the world have heavily scrutinized the industry and its proposed mergers, often asking whether such tie-ups will lead to higher shipping rates for customers.
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