NYK, MOL and K Line agree to merge container shipping business

1 November 2016 (Last Updated November 1st, 2016 18:30)

Japanese companies Kawasaki Kisen Kaisha (K Line), Mitsui OSK Lines (MOL) and Nippon Yusen Kabushiki Kaisha (NYUKF) have agreed to merge their container shipping businesses to establish a new joint-venture (JV) company.

Japanese companies Kawasaki Kisen Kaisha (K Line), Mitsui OSK Lines (MOL) and Nippon Yusen Kabushiki Kaisha (NYUKF) have agreed to merge their container shipping businesses to establish a new joint-venture (JV) company.

The new JV will include worldwide terminal operating businesses of the three companies, excluding Japan.

Approved by the board of directors of each of the companies, the deal is yet to receive regulatory approval from the concerned authorities.

"Although growing modestly, the container shipping industry has struggled in recent years due to a decline in the container growth rate."

The three companies will further sign a business integration contract and a shareholder agreement in relation to the merger.

With a 38% share, NYUKF will become the majority shareholder in the JV, while K Line and MOL will own a 31% share each.

A statement in the notice of agreement issued by the three companies read: “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 destabilised the industry and has created an environment that is adverse to container line profitability.”

Planned to be completed by July next year, the proposed JV will have a fleet size of around 1.4 million twenty-foot equivalent unit (TEU), capturing around 7% of global share.

The JV is also expected to realise integration effect of around JPY110bn ($1,048m) per year.