CONTACT US

Send us a message

* Please fill in the form below.
NYK, K Line and MOL pass first marker buoy en route to the merger

NYK, K Line and MOL pass first marker buoy en route to the merger

 The Competition Commission of Singapore (CCS) has become the first jurisdiction to approve the container divisions merger of deepsea Japanese shipping lines MOL, NYK and K Line.

 

The CCS said the joint-venture would not contravene its anti-competition rules where a merged entity controls more than 40% of a market – in this case the intra-Asia and East Asia services that converge on Singapore.

 

It said the merged entity would break market thresholds; industry barriers to entry are not especially high in the region; barriers to expansion remain low with continuing shipboard overcapacity and that “container lines are able to include Singapore as a port of call without incurring substantial cost”; and that a significant number of freight forwarder and beneficial cargo owning customers “demonstrate bargaining power through their procurement processes”.

 

The three carriers are to merge their liner and container terminal activities outside Japan as a response to the merger and acquisition activity sweeping through the liner industry.

 

During the recent TPM conference in Long Beach, Jeremy Nixon, chief executive of NYK line, defended the elongated time frame of the merger, which had been announced at the end of October, but was not set to be completed until April 2018.

 

Such a timescale, the longest of the mergers currently underway, has led some to argue that it is adding to market instability. Hua Joo Tan, executive analyst at Alphliner, said it was “the longest merger process” he had ever seen.

 

“This means there is a lot of pre-merger manoeuvring – somebody has to take the lead but nobody has, which has led to some aggressive price moves, and this will cause some uncertainty in the run-up to the merger.

However, Mr Nxion claimed there were legal reasons preventing a quicker process.

 

“We are now in the regulatory phase and we have to get clearance in 96 countries, that is why there is an 18-month timeline.

 

“I have been through two major mergers and acquisitions in my career, and I know how important planning is. We want to go through this very carefully as we put the network together – THE Alliance will effectively produce our east-west network.

 

“In July we will announce the name of the new company – and it’s going to be a good name – and start setting up the staff and the systems. But the three companies will continue to serve their respective customers until April 2018.

 

“However, the new company will begin to take bookings in the new system from February 2018.

 

Mr Nixon said the new firm would have $3bn in assets – $1.5bn in vessels and $1,5bn in terminals – and argued that it would be big enough to compete in the new era of consolidated liner shipping.

 

“We still think there is room in the market for a new brand: big enough to be sustainable and small enough to care about customers. For example, there are lines’ terminals in North America which will become part of the service, so we will focus on the whole end-to-end service.”

 

Ron Widdows, chairman of the World Shipping Council and a 40-year veteran of the liner industry, applauded the deal as something “really remarkable”, but argued the lines would need to find a new value proposition for shippers.

 

“This creates an animal that will have better cost and efficiency, but it is still in the order of magnitude that makes it smaller rather than the largest. The Japanese are going to have to find a way to compete, because if it is just about cost the big beasts will crush them.

 

“But these [Japanese] carriers, along with Hapag-Lloyd, have always been at the upper edges of service levels, so in all the uncertainty there’s an opportunity for someone to stand out and say that it isn’t all about cost.”

 

 

Source: Loadstar

OTHER NEWS

  • APL turnaround brings significant boost to CMA CGM first-quarter results
  • Uber Freight officially parks in the marketplace, but only taking full loads
  • China Sparks World Container Traffic Boom
  • Navios Containers Eyes USD 75 Mn for Rickmers Fleet
  • Shippers squeezing margins 'pushed carriers toward bigger ships and alliances'
  • Crane Falls at Jebel Ali Port after Boxship Collision, No Fatalities
  • Nerves jangle as shippers and forwarders wait to hear who is bankrolling Yang Ming
  • Future Management of Hamburg Süd Unveiled
  • Shock for Japanese shipping lines as merger plan is rejected by US FMC
  • Yang Ming Expects 2nd Stage of Recapitalization by June
  • targets 3% growth as next-generation Triple-Es start to arrive
  • Sharp Decline in Idling Boxships
  • APL Enhances China-Indonesia Coverage
  • Yang Ming Halts Share Trading
  • Shanghai port, world's busiest, grapples with traffic congestion
  • Drewry: Bigger Ships to Continue Pressuring Freight Rates
  • Alibaba extends partnership with KN to cover cross-border B2B shipments
  • Seago Line Sees Modest Profit amid Lower Freight Rates
  • ZIM, MSC Upgrade North Europe Express Service
  • DHL Says Ocean Freight Rates Have Reached Turning Point
  • CMA CGM Strengthening EURAF 5 Services
  • OCEAN Alliance Starts Ploughing the Seas
  • Yang Ming losses continue to mount after 2016 revenue slump
  • FMC green light for 2M Alliance co-operation with HMM on transpacific
  • NYK, K Line and MOL pass first marker buoy en route to the merger
  • Maersk sets sail for logistics on land as shipping rates slump
  • Cosco Shipping Earns Less amid Shipping Market Imbalance
  • Maersk Line Offers Concessions to EU on Hamburg Süd Acquisition
  • Clarksons: Shipping Industry Looking for Ways to Return to Faster Volume Growth
  • Carriers bid to impress shippers with faster Asia-North Europe transit times
  • Hyundai Merchant officially joins major shipping alliance
  • APL to Add New, Modify Existing Three Services
  • Alphaliner: Asia-Europe Trade to See Further Rate Turmoil