NYK, MOL and K Line to Merge Container Shipping Businesses
Kawasaki Kisen Kaisha, Ltd., Mitsui O.S.K. Lines Ltd. and Nippon Yusen Kabushiki Kaisha will establish a new joint-venture company to integrate the container shipping businesses.
The shippers have agreed, after the resolution by the board of directors of each company, and subject to regulatory approval from the authorities, to establish a new joint-venture company to integrate the container shipping businesses, including worldwide terminal operating businesses excluding Japan, of all three companies and to sign a business integration contract and a shareholders agreement.
Although growing modestly, the container shipping industry has struggled in recent years due to a decline in the container growth rate and the rapid influx of newly built vessels. These two factors have contributed to an imbalance of supply and demand which has destabilized the industry and has created an environment that is adverse to container line profitability. In order to combat these factors, industry participants have sought to gain scale merit through mergers and acquisitions and consequently the structure of the industry is changing through consolidation.
The new joint-venture company aims to take advantage of scale merit of its vessel fleet totaling 1.4 million TEUs, realize integration effect of approximately 110 billion Japanese Yen annually and seek financial performance stabilization.