News / Japanese carrier trio miss first target for ONE merger, but it's all 'going to plan'

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K Line, MOL and NYK have insisted that the integration of their container businesses is still going to plan, despite missing the 1 July establishment target for the new Ocean Network Express (ONE) brand.

They said said the new company had “received all necessary approvals for compliance with local competition laws in regions and countries where compliance is required”.

They added “progress is being made” and further details “will be announced upon completion of all established procedures”.

The missed date of 1 July had “no impact” on integration plans and the commencement date for ONE was “unchanged from 1 April 2018”.

On 21 June, the South African Competition Commission announced it had “prohibited” the merger of the Japanese trio, alleging that the transaction was “likely to increase the scope for coordination in the container liner shipping market, while creating a platform for coordination in the car carrier market”.

However, the Japanese carriers seem optimistic that they can overturn this decision on appeal. They said in today’s release: “In the republic of South Africa, the new company expects to complete the approval process for compliance with competition law before the service commencement date of 1 April 2018.”

Elsewhere, the merger still awaits a decision from the US, after the Federal Maritime Commission (FMC) decided it could not rule on the matter and referred it to the US Department of Justice.

The merger into ONE will integrate K Line, MOL and NYK’s container businesses and global terminals, except those in Japan. The new entity will take sixth place in the global rankings league table with capacity of some 1.4m teu and an approximate 7% market share.

The biggest carrier, NYK, with a fleet capacity of about 563,000 teu, will have a 38% stake in ONE, with MOL (536,000 teu) and K Line (354,000 teu) each holding 31%.

From 1 April all three Japanese carriers became members of THE Alliance, along with Hapag-Lloyd and Yang Ming.

The delay in finalising the merger is perhaps no surprise to many in the industry, given the long, complex political history of the Japanese carriers. One source told The Loadstar last week it could be “weeks, or even months,” before the “I’s are dotted and the T’s crossed”.

In particular, this involves selecting and forming a single operational and a single commercial department from the three carriers, resulting in potential significant redundancies.

The lines also have to be careful not to alienate their customers in a rushed merger. They include the huge Japanese trading houses, many of which have supported the individual container lines for decades.

While the holding company will remain in Japan, the trio said the global HQ of ONE would be based in Singapore, supported by regional headquarters in Hong Kong, London, Richmond in the US and Sao Paulo, Brazil.