By R. Bruce Striegler
Marine shipping analyst Alphaliner notes the recent major Japanese container line merger, comprising NYK, Mitsui OSK Lines and K Line, is set to go with an outstanding bright magenta colouring, far removed from the usual dark, plain colours generally seen in the industry. ONE, (Ocean Network Express Pte. Ltd.) announced in 2016, and started trading under its new name as of April 1, 2018. The new company will operate from a global headquarters in Singapore, regional headquarters in the United Kingdom, the United States, Hong Kong and Brazil and a holding company office in Tokyo. All approvals for the merger from antitrust authorities in all regions and countries were completed in January 2018.
With this move, the three Japanese carriers officially established the world’s sixth-largest liner shipping company. ONE offers a capacity of 1.44 million TEU’s, 240 operational vessels and a service network covering over 90 countries. The merged company will add seven new ships (14,000 TEU) within the year. In the April 2018 announcement news release, company CEO Jeremy Nixon says, “To be a truly global organization and shipping line, ONE believes its work force should have people with an international orientation, outlook and background to ensure the service quality that we give is really supporting the global trade and more importantly, to make sure that ONE can really come across as one team globally to service the customers,”
According to ONE’s senior executive in Singapore, the merger of the three lines was brought about, “Due to low oil-prices, sluggish cargo demand, over-supply of trade capacity, and container freight rates at historic lows.” The executive pointed out how most container shipping companies are registering losses. “The three Japanese companies have made efforts to cut cost and restructure their business, but there are limits to what can be accomplished individually.” He notes that additionally, keeping a membership within a global alliance requires business to remain above certain levels. “Under such circumstances, we have decided to integrate our container shipping business so that we can continue to deliver stably high quality and customer focused products to the marketplace.”
ONE focuses on cold chain supply solutions
Tim Harrington, Ocean Network Express Director of Sales Canada, says, “ONE provides global cold supply chain solutions for our clients in the refrigerated-perishables business segment.” He adds that Canada, in particular, “Has been a country where new ideas, processes and services have been built to protect the integrity of this sensitive cargo.” Harrington explains that working collaboratively with customers, truckers, and the company’s container yard facilities, as well as the railroads, and ocean terminals, the last mile transportation teams, “ONE delivers a unique product to our customers. Whether it’s snow crab or shellfish through the port of Halifax or chilled protein and fruits-vegetables through the port of Vancouver, ONE can move refrigerated products in and out of this vast country with unmatched competence.”
“We are particularly proud of the work that we have done with Canadian National Railway in the past several years. Together with our clients and other partners, we identified gaps in process and service delivery. Once identified, we applied science and engineering to our challenges, set service parameters and responsibilities, then put our plan into place. We are now moving temperature controlled products more than 11,000 km from Canada to Asia on a consistent basis”.
To do this, Harrington explains how ONE in Canada created a Refrigerated Direct CARE Team in Toronto dedicated to this business. “Key clients will be serviced by this team in close coordination with their salespeople and partners in the cold supply chain as we look to continuously improve our product.” He suggests that shippers need to closely compare what is being offered in the market, noting there are only a few ways to move chilled or frozen product across Canada. “While clients can use air – which they do – they can also use 53-foot containers on rail, and trans-load their cargo before loading temperature controlled ocean containers at another facility near the port. That would require them to truck to the terminal and onto vessels; or they can truck the cargo across the country and trans-load, similar to the 53-foot model. “We believe that ‘kilo for kilo’ Ocean Network Express is the fastest, safest and most valuable mode of transport for our clients.”
Mr. Harrington points out that ONE’s investment in the cold chain supply business is significant, but that much depends upon the availability of containers (with appropriate pre-tripping disciplines), gensets, chassis (where required) and plug space on the vessels is critical for planning purposes.
“The cost of providing these services is not decreasing, however most customers do understand the value and the differentiation that ONE provides, and we appreciate the patience of our clients as we develop this program for them.”
With the commencement of ONE’s business operations, there will be up to four companies, namely ONE, K Line, MOL, and NYK operating on the same service concurrently during the transitional period until three pre-existing lines completely stop operating vessels. Shipping analysts say that as far as container shipping is concerned, the current decade has probably seen the most number of consolidations, mergers, acquisitions and alliances than any other period in container shipping history.