{"id":458,"date":"2016-11-01T13:47:07","date_gmt":"2016-11-01T13:47:07","guid":{"rendered":"https:\/\/phoenixglobalgroup.com\/mi-katigoriopoiimeno\/nippon-yusen-kabushiki-kawasaki-kisen-and-mitsui-o-s-k-merge-businesses\/"},"modified":"2024-02-27T09:45:37","modified_gmt":"2024-02-27T09:45:37","slug":"nippon-yusen-kabushiki-kawasaki-kisen-and-mitsui-o-s-k-merge-businesses","status":"publish","type":"post","link":"https:\/\/phoenixglobalgroup.com\/el\/nea\/nippon-yusen-kabushiki-kawasaki-kisen-and-mitsui-o-s-k-merge-businesses\/","title":{"rendered":"Nippon Yusen Kabushiki, Kawasaki Kisen and Mitsui O.S.K. merge businesses"},"content":{"rendered":"
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TOKYO \u2014 In a fresh sign of the economic fallout from weaker global trade, Japan\u2019s three largest shipping companies agreed on Monday to merge a major portion of their businesses, saying they needed to join forces to survive.<\/p>\n

The president of one of the companies, Nippon Yusen Kabushiki Kaisha, said the groups faced bleak prospects on their own. The shipping industry was shaken in August by the bankruptcy of South Korea\u2019s biggest container shipping line,\u00a0Hanjin Shipping<\/a>, while other shipping companies in Asia, Europe and the Middle East have sought to protect themselves through mergers and acquisitions. \u201cIf we don\u2019t want the number of Japanese shipping companies to be zero, we need to create one strong, splendid company,\u201d the president of Nippon Yusen, Tadaaki Naito, said at a news conference.<\/p>\n

By combining their container operations in a joint venture, the three companies \u2014 the others are Kawasaki Kisen Kaisha and Mitsui O.S.K. \u2014 will create a business worth about 300 billion yen, or $2.9 billion, according to a\u00a0news release<\/a>. It will operate 256 ships, representing about 7 percent of the global market by container volume. Kawasaki Kisen and Mitsui O.S.K. will each own 31 percent of the new company, while Nippon Yusen will own 38 percent. They said they expected combining their fleets to save about \u00a5110 billion per year. The deal is expected to be complete by July 1, with operations beginning in April 2018. The companies\u2019 bulk-shipping lines, which transport cargo like grain and iron ore, will remain independent.<\/p>\n

The global shipping industry has struggled with a soft global economy, which has reduced both the amount of consumer goods traded around the world and the prices that shipping companies can charge. The 2008 global financial crisis\u00a0hit trade volume<\/a>, and trade flows since then have been\u00a0weaker than expected<\/a>\u00a0as Europe muddles through debt problems, the United States experiences a soft recovery and China\u2019s heady growth rates slow.<\/p>\n

A shipbuilding spree that took place before the crisis has exacerbated the problem. Shipping lines\u00a0set plans<\/a>\u00a0a decade ago to buy more ships and expand at a time when trade looked strong, and today they have far more capacity than they can profitably use.
\nShipping lines have explored consolidation and alliances as a result. CMA CGM of France is acquiring Neptune Orient Lines of Singapore, the German shipping line Hapag-Lloyd AG agreed this year to merge with United Arab Shipping Company, and several mergers have taken place among state-owned shipping businesses in China. But\u00a0regulators around the world<\/a>\u00a0have heavily scrutinized the industry and its proposed mergers, often asking whether such tie-ups will lead to higher shipping rates for customers.<\/p>\n

Perhaps anticipating such scrutiny from Japanese regulators, Eizo Murakami, president of Kawasaki Kisen, acknowledged that the three-way tie-up would reduce competition. But he said consolidation elsewhere in the industry only made it more crucial.<\/p>\n

\u201cThis is a big decision, since it will create what will be the only container-shipping company in Japan,\u201d he said. \u201cBut with the European industry consolidating and the business becoming more of an oligopoly, we need the scale that being a single company would provide.\u201d<\/p>\n

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