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The world’s newest shipping line officially began operations on April 1st, 2018. As new as it is, the members of which it’s made up are foreign to none in the shipping industry.
The Ocean Network Express, or ONE, is a result of the merger of Japan’s formerly-three largest shipping lines, Nippon Yusen Kaisha (NYK), Mitsui OSK Lines (MOL), and Kawasaki Kisen Kaisha (K Line). The start of container shipping operations this month is in line with the initial schedule laid out when the company was officially established on July 7, 2017.
The merger is one in a wave of shipping consolidations in the wake of Hanjin Shipping’s bankruptcy in an attempt to stay afloat amid the prolonged economic downturn in the ocean freight industry. Through the merger, ONE is expected to cut around $440 million in costs in its first fiscal year of operations. The liner began receiving bookings on Feb 1st and its bright-colored containers began arriving at ports around the world a couple of weeks later.
NYK, MOL, and K Line are all members of THE Alliance, which started joint operations last April. With the merger now in place, they will continue to provide their services as a combined entity of ONE.
Together, they make up the world’s sixth largest containerline with a global market share of 6.9%, according to Alphaliner. This is a stark achievement and perhaps one to boast of for the three liners, none of which even made the top ten container lines at the turn of the decade.
In total, the amount invested by the three lines amounted to $3 billion. Of this, NYK holds the largest share with 38%, and MOL and K Line with 31% a piece.
ONE will operate a combined fleet size of 1,440,000 TEUs through around 230 vessels and offer 85 service loops which will call at over 200 of the world’s major ports in 100 countries.
Here are some numbers and figures behind the merger.
The ONE merger will combine all three companies’ container shipping ventures, which includes their respective terminal operations, excluding those in Japan. Its CEO, Mr Nixon, has said the carrier’s main priority this year would be to ensure its smooth transition while seeking value-added opportunities that could complement its existing setup over the next couple of years.
“Realistically we do not expect to go toe to toe with the top four in terms of pure scale and global market share. Where possible we will take a differentiated service approach, and ensure we have a strong focus on yield management, and innovation whilst also aiming to maintain a strong balance sheet.”
The industry will be waiting for the operational and financial results of this merger. But at first look, it’s safe to say that it makes a lot of sense for the three to come together and join forces instead risking it on their own. However, approaches and protocol will have to be set as the trio look to take on a brand new identity.
“Each carrier has its own strengths and weaknesses so the trick will be to carry over the strengths. Obviously, with three company cultures coming together into one there will be some values that will change. This will cost them some clients, especially those who enjoyed a certain way of working with a certain carrier. How their contacts with one carrier were able to assist will now be covered by multiple staff members and departments. It’s now very much a matter of what approach is adopted as the new company culture and what type of service they want to offer their clients.“
- Klaus Lysdal, Vice President of Sales and Operations, iContainers