The Federal Maritime Commission (FMC) yesterday threw a curveball on the planned mega Japanese container shipping merger.
The FMC has said Kawasaki Kisen Kaisha (K Line), Nippon Yusen Kaisha (NYK) and Mitsui OSK Lines (MOL) cannot share information with each other in advance of a new merged business entity being created next year.
Amid unprecedented consolidation in the container sector last year Japan’s three largest shipping lines agreed to merge their boxlines together, a move that will give the combined entity a fleet of around 1.5m teu.
NYK will have a 38% stake in the proposed new venture with K Line and MOL holding 31% each.
“Most container shipping companies are making a loss. The three Japanese companies have made efforts to cut cost and restructure their business, but there are limits to what can be accomplished individually. Also, in order to keep a membership of a global alliance continuously, it would be necessary to have above a certain business scale level,” the three lines said in a statement last October.
No spanner Sam.
Although they must file with FMC, this is a merger and thus it falls in the ambit of the Department of Justice. No one is preventing the 3 companies to merge. Once this has happened, DoJ will take over. But FMC will never preempt the work of DoJ, particularly as the Shipping Act of 84 does not give FMC the mandate to approve/disapprove such schemes, opposite to what happens in Europe.
Brgds,
HH