Analysts welcome Japanese box merger and ponder who’s next in consolidation wave

Analysts welcome Japanese box merger and ponder who’s next in consolidation wave

Shipping analysts have applauded the move from Japan’s big three lines to merge their container divisions, while musing who will be next in the box sector’s giant round of consolidation.

Nippon Yusen Kaisha (NYK), Mitsui OSK Lines (MOL) and Kawasaki Kisen Kaisha (K Line) have decided to spin off their respective container divisions to form a brand a new company.

“We saw that a number of companies were collapsing or merging and the size of firms was increasing,” Tadaaki Naito, president of NYK, told reporters in Tokyo yesterday. “If we don’t have scale, then things aren’t going to look pretty.”

The combined three will have a box fleet of 1.4m teu and 110 ships making it the fifth largest containerline in the world.

Lars Jensen, a partner at SeaIntelligence Consulting in Copenhagen, noted the merger puts the trio on a par with Hapag Lloyd and China Cosco Shipping, providing a platform to continue to compete in what Jensen described as “a game that is all about scale”.

“This in turn increases the long-term strategic pressure on the remaining mid-sized global carriers of Hamburg Süd, Hyundai Merchant Marine, Yang Ming and OOCL,” Jensen noted. Jensen has in the past suggested that by the mid-2020s there will be just six to eight global container carriers.
2016 has already seen CMA CGM take on APL, Cosco merge with China Shipping and Hapag Lloyd and UASC join forces.

Analsysts at Drewry meanwhile welcomed the news from Japan.

“We believe this to a be positive step for the industry but the transition will be time consuming,” Drewry said in a note to clients, adding: “Alliances along with M&A are response to the low-growth industry, where a significant number of carriers have not made money in the recent past.”

Andy Lane from CTI Consultancy also warned that the merger would need to be handled quickly and efficiently, something that shipping mergers in the past have rarely achieved.

“Time is not your friend within a merger, staff lose buy-in and this can also impact customer confidence. Not to mention that the efficiencies are required now, and not in 18 or 30 months’ time,” Lane told Splash.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.

Related Posts