Tuesday, 1 November 2016

NYK, MOL and K Line to merge container operations

Yesterday the three largest Japanese shipping lines Kawasaki Kisen Kaisha Ltd. (K-Line), Mitsui OSK Lines (MOL), and Nippon Yusen Kabushiki Kaisha (NYK) announced their agreement, subject to sign off by their respective boards and shareholder/regulatory approval, to establish a new joint-venture company and to integrate their container shipping operations.

M&A activity is sweeping the shipping industry globally as carriers in the wake of the Hanjin Shipping receivership fight to survive. The current wave of M&A activity is more about addressing structural industry issues by strengthening balance sheets, addressing poor investor returns and adapting to a low growth environment.

The industry still suffers from surplus capacity so M&A activity is needed to realign carriers and find synergies in cost reduction, economies of scale, improved competitive positioning and better protection from the prevailing weak industry fundamentals.

This announcement is another positive step for the industry where a significant number of carriers have not made money in the recent years. People that were affected by Hanjin's demise know the problems this caused and is still causing so hopefully another failure by a major carrier can be avoided.


The industry must navigate it's way back to a healthy and sustainable performance for all stakeholders as fast as it can.
All for now,