The birth and helplessness of the world's sixth-largest shipping company
2017-07-12 09:00
(From left) Kawasaki Kisen Kaisha President Murakami, Mitsui O.S.K. Lines President Ikeda, Nippon Yusen Kaisha President Naito, ONE President Nixon (From left) Kawasaki Kisen Kaisha President Murakami, Mitsui O.S.K. Lines President Ikeda, Nippon Yusen Kaisha President Naito, ONE President Nixon
Japan's three major shipping companies, Nippon Yusen, Mitsui O.S.K. Lines, and Kawasaki Kisen Kaisha, announced a merger on July 10. Container ship A press conference was held in Tokyo to mark the official launch of the new company formed after the merger of container shipping businesses. The new company, Ocean Network Express (ONE), has a transport capacity of approximately 7% of the global market, ranking 6th. On the other hand, large Chinese state-owned enterprises Cosco decided on the 9th to acquire the Hong Kong shipping company Orient Overseas (OOCL), and the gap between Japanese companies and global shipping giants remains.
"The three companies that were previously competitors will merge into one. We hope to become a company with a presence." On the afternoon of July 10, the presidents of the three companies, all wearing red ties representing ONE's color, expressed their expectations for ONE at the press conference.
ONE was established on July 7 by Nippon Yusen, Mitsui O.S.K. Lines, and Kawasaki Kisen Kaisha. It is scheduled to start operations in April 2018, with its headquarters in Singapore, responsible for operations and shipping management. ONE's CEO is Jeremy Nixon, a director of Nippon Yusen. The headquarters of the holding company that owns ONE is located in Tokyo.
Through operational integration, ONE will have a fleet of approximately 240 vessels, including the world's largest container ship currently operated by Mitsui O.S.K. Lines, forming a shipping network connecting more than 90 countries. Kawasaki Kisen Kaisha President Eizo Murakami predicted that ONE's workforce will be "around 10,000 people".
However, global shipping giants have already taken the lead in achieving large-scale operations through mergers and acquisitions (M&A). After the three Japanese companies announced their merger in October 2016, Denmark's Maersk Group (A.P. Moller-Maersk) also decided to acquire a large German shipping company. If successful, Maersk will have a 20% global market share.
On July 9, Cosco Shipping Holdings, ranked 4th globally, announced the acquisition of Hong Kong-based peer and 7th-ranked Orient Overseas (OOCL) for HK$49.2 billion. After the acquisition, Cosco Shipping is expected to rise to 3rd place. Regarding the acquisition of Orient Overseas, both CMA-CGM of France and Evergreen Marine of Taiwan had expressed interest.
In the container shipping business, which is susceptible to market fluctuations, scale and competitiveness are directly related. Those who efficiently transport large quantities of goods can easily control costs. The larger the company, the stronger its negotiating power with cargo owners and land-based logistics networks, such as trucking from ports.
At the press conference, Jeremy Nixon emphasized ONE's size, stating, "In the medium to long term, we don't believe the scale is large enough." Citigroup Securities analyst Ryota Hino pointed out, "To compete with the top three global players, we hope to have a 10% market share."
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