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Three Japanese shipping giants agree to merge

[ November 4, 2016   //   ]

After the resolution by the board of directors of each company held on Oct. 31, three Japanese shipping giants — Kawasaki Kisen Kaisha, Ltd. (K-Line), Mitsui O.S.K. Lines Ltd., and Nippon Yusen Kabushiki Kaisha have agreed to merge, subject to regulatory approval from authorities.

The lines plan to establish a new joint-venture company to integrate the container shipping businesses (including worldwide terminal operating businesses excluding Japan) of all three companies and to sign a business integration contract and a shareholders agreement.

Although growing modestly, the container shipping industry 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 which has destabilized the industry and has created an environment that is adverse to container line profitability.

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. Under these circumstances, three companies have now decided to integrate their respective container shipping on an equal footing to ensure future stable, efficient and competitive business operations.

The new joint-venture company is expected to create a synergy effect by utilizing the best practices of the three companies. And by taking advantage of scale merit of its vessel fleet totaling 1.4 million TEUs, realize integration effect of approximately 110 billion Japanese Yen annually and seek swiftly financial performance stabilization. By strengthening the global organization and enhancing the liner network, the new joint-venture company aims to provide higher quality and more competitive services to exceed clients’ expectations.

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