Japanese giants to merge box ship operations

OCTOBER 31, 2016 — Japan's Kawasaki Kisen Kaisha, Ltd. (K Line), Mitsui O.S.K. Lines (MOL) and Nippon Yusen Kabushiki Kaisha (NYK) plan to integrate their container shipping businesses by setting a new joint venture company that would also include their worldwide terminal operating businesses outside of Japan. It will have a fleet with a total capacity of 1.4 Million TEU, making it sixth in the market with an approx. 7% share of the global market.

They say that, while growing modestly, the container shipping industry has struggled in recent years because of a decline in the container growth rate and the rapid influx of newly built vessels. The imbalance of supply and demand has destabilized the industry and has created an environment adverse to container line profitability. In response, industry participants have sought to gain scale merit through mergers and acquisitions and the structure of the industry is changing through consolidation.

"Under these circumstances, the three companies have now decided to integrate their respective container shipping on an equal footing to ensure future stable, efficient and competitive business operations," they say in a statement. "The new joint-venture company is expected to create a synergy effect by utilizing the best practices of the three companies."

Target date for establishment of the new joint-venture company is July 1, 2017, with business operations commencing on April 1,2017.

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