Japanese Carrier Trio K Line, MOL, and NYK Announce Consolidation Plan

The companies say markets have been hit with a decline in the container growth rate and a rapid influx of newly built vessels.

Japanese container shipping lines Kawasaki Kisen Kaisha, Ltd. (K Line), Mitsui O.S.K. Lines Ltd. (MOL), and Nippon Yusen Kabushiki Kaisha (NYK) Monday said they are to merge their shipping and overseas terminal operations.

In a statement Monday, the companies said that, subject to the appropriate regulatory approval, they would establish a new a joint-venture company to integrate their container shipping businesses that would also include worldwide terminal operating businesses outside of Japan.

"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 destabilized the industry and has created an environment that is adverse to container line profitability," the companies said.

"In order 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, three companies have now decided to integrate their respective container shipping on an equal footing to ensure future stable, efficient and competitive business operations."

The shipping lines said that the joint venture will see K Line and MOL each contribute 31 percent of the overall 300 billion yen ($2.85 billion) equity, and NYK the remaining 38 percent.

The combined operations will consist of around 1.4 Million TEU of capacity, making it the 6th largest in the market with approximately 7 percent of global capacity share, they companies added.