Japanese container shipping lines announce joint venture

Japanese container shipping lines announce joint venture
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Kawasaki Kisen Kaisha, Ltd., Mitsui O.S.K. Lines Ltd., and Nippon Yusen Kabushiki Kaisha have agreed 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.

In announcing the planned merger, the three companies note that despite modest growth in their business, there has been an appreciable decline in the container growth rate and the rapid influx of newly built vessels, which have resulted in container freight rates being at historic lows, and most shipping companies have been reporting significant losses.

The factors have contributed to an imbalance of supply and demand that has destabilized the industry and has created an environment that is averse to container line profitability.

While the three Japanese companies have taken steps to cut costs and restructure their business, the companies note 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.

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. Under these circumstances, the three companies have decided to integrate their respective container shipping on an equal footing to ensure future stable, efficient and competitive business operations.

Prior to the announced merger plans, the three companies have cooperated through vessel-sharing agreements and alliance scheme. Further the three container lines are similar in size, have common corporate cultures, and believe the JV can leverage the strength of each individual company to create stronger competitor overall.

Under the proposed merger, the parent companies of all three container lines will inject cash and in-kind contribution of vessels and terminal companies’ stocks into to the new JV in accordance with agreed share to establish an operating company to manage container shipping and container terminal (excluding Japan) business. The holding company will supervise the operating company as a shareholder.

Combined, the three companies will control 1.4 million TEUs, making it the sixth largest container line and give the merged company a 7 percent share of the global market. The establishment of the joint venture company is expected to be July 1, 2017, and business will officially begin on April 1, 2018.

Under terms of the agreement, NYK will control 38 percent of the business, while K-Line and Mitsui will each have a 31 percent stake in the newly formed ship line.

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Source: Recycling Today
Japanese container shipping lines announce joint venture
<![CDATA[Kawasaki Kisen Kaisha, Ltd., Mitsui O.S.K. Lines Ltd., and Nippon Yusen Kabushiki Kaisha have agreed 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. In announcing the planned merger, the three companies note that despite modest growth in their business, there has been an appreciable decline in the container growth rate and the rapid influx of newly built vessels, which have resulted in container freight rates being at historic lows, and most shipping companies have been reporting significant losses. The factors have contributed to an imbalance of supply and demand that has destabilized the industry and has created an environment that is averse to container line profitability. While the three Japanese companies have taken steps to cut costs and restructure their business, the companies note 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. To combat these factors, industry participants have sought to gain scale merit through mergers and acquisitions and…