Freight News, Sea

MOL, K Line, NYK to commence ONE Line in April

[ January 12, 2018   //   ]

The joint venture formed by Japan’s big three shipping groups – MOL (31%), K Line (31%), and NYK (38%) last July 2017 will commence joint service beginning April 1, 2018 under the Ocean Network Express (ONE) alliance, a new containership company.

“I believe this new enterprise will deliver the advantages of expansion of scale brought by the integration,” said Eizo Murakami, President & CEO, K Line. “I expect it will also achieve greater competitiveness by bringing to bear the best practices of the three companies and demonstrate a strong presence in a containership industry that continues to undergo a paradigm shift.”

He described ONE as being  an affiliated company accounted for by the equity-method, and thus will have a different operating format. “Nonetheless, Containership Business will remain a core segment of our Group, and we will continue to give it our full support,” he said.

The combined container vessel capacity of ONE Line weighs in at 1.4 million TEU, making it the world’s sixth largest carrier group.  It will have a global market share of approximately 7%.

NYK owns the largest container fleet, with 68 vessels with a total capacity 507,046 TEU, valued at $2.33 billion; followed MOL, with 35 ships for 307,449 TEU, valued at $1.7 billion, and third K Line, which owns 31 containerships with a capacity of 240,440 TEU and a value of $1.2 billion.

A factor in forming the alliance was the result of low oil prices, sluggish cargo demand, oversupply of trade capacity, and historically low container freight rates.

“The three Japanese companies have made efforts to cut cost and restructure their business, but there are limits to what can be accomplished individually,” a joint statement said. “Furthermore, the decision to cooperate in the East/West trades made in May 2016 by the creation of THE Alliance was also a factor.”

The three steamship lines had joined THE Alliance that includes Hapag-Lloyd, Yang Ming Hanjin Shipping, which went bankrupt last year. Hapag-Lloyd also merged with UAE’s United Arab Shipping Co. (UASC), last year, thereby making it part of THE Alliance.