By Mike Wackett
The container businesses of K Line, MOL and NYK will operate under the tradename Ocean Network Express (ONE) from 1 April next year. In a joint statement on May 31 the Japanese trio said: “The move will allow Ocean Network Express to better meet customers’ needs by providing high-quality, consolidation and enhancement of the three companies’ global network and service structures.”
The JV will integrate K Line, MOL and NYK’s container shipping businesses, including global terminals (not in Japan), propelling the new entity into sixth place in the global rankings with a capacity of around 1.4 million TEUs and an approximate 7 per cent market share. The largest carrier of the trio, NYK, with a fleet capacity of 592,000 TEUs, will have a 38 per cent stake in ONE, with K line (358,000 TEUs) and MOL (491,000 TEUs) each having 31 per cent.
Following the merger announcement in October, the three companies said their target of establishing the new JV was stemmed for 1 July this year. However, the May 31 statement did not mention this date, but rather that the new JV would “officially be announced once all anti-trust reviews are completed”.
The carriers received a major setback earlier in May when the US Federal Maritime Commission rejected their “tripartite agreement” (filed with the FMC on 24 March) that would have allowed the three shipping lines to begin sharing information and conducting joint negotiations from 8 May, ahead of the merger. The FMC said: “The Shipping Act does not provide the FMC with authority to review and approve mergers.”
The matter was referred to the US Department of Justice (DoJ) for jurisdiction, but to date there has been no news of the progress.
In mid-March, the proposed JV received approval from the Competition Commission of Singapore (CCS), but no updates on regulatory approvals elsewhere were advised in the May 31 statement.
Nevertheless, ports and service providers are preparing to “sharpen their pencils” for when the JV is in a position to officially negotiate. One service provider told The Loadstar recently he was “just waiting for the knock on the door” and fully expected to have to reduce his rates to at least the lowest common denominator of the three carriers. He said: “Our experience of previous liner mergers is that the lowest common denominator is the starting point from which the procurement officers will aim to get reductions based on increased volumes.”
Meanwhile, customers, including Japanese trading house behemoths, many of which have supported K Line, MOL or NYK for decades, will hope that the transition to ONE is as seamless as possible. But until the merger is completed, they could have their loyalty tested by receiving attractive approaches from aggressive competitors.
While the holding company will remain in Japan, the global HQ of ONE will be in Singapore, supported by regional headquarters in Hong Kong, the UK (London), the US (Richmond) and Brazil (Sao Paulo).
Reprinted courtesy of The Loadstar (www.theloadstar.co.uk).