Drewry: Ocean Network Express will be sixth largest container carrier

The Ocean Network Express – consisting of Japanese ocean carriers “K” Line, MOL and NYK – will have a containership fleet of close to 1.4 million TEUs when it launches, giving it about a 7 percent market share based on today’s fleet, according to Drewry.    Once the Ocean Network Express (ONE), a merged containership entity of Japan’s three largest ocean carriers, commences operations, it will be the world’s sixth largest carrier measured by containership fleet, according to a recent report from Drewry.
   The London-based maritime consultant projects the ONE will sport a fleet with close to 1.4 million TEUs of capacity, giving it approximately a 7 percent market share based on today’s global fleet and placing it firmly behind Maersk Line, Mediterranean Shipping Co. (MSC), CMA CGM, COSCO and Hapag-Lloyd.
   All recent merger and acquisition deals, including CMA CGM’s impending Q4 2017 purchase of Mercosul Line from Maersk, are factored in to this ranking, Drewry said.
   ONE is scheduled to commence April 1, 2018, pending anti-trust reviews, and will include Kawasaki Kisen Kaisha, Ltd. (“K” Line), Mitsui O.S.K. Lines, Ltd. (MOL), and Nippon Yusen Kabushiki Kaisha (NYK). The joint venture will integrate the three companies’ container shipping businesses, including worldwide terminal operations businesses, but excluding those in Japan, according to the carriers.
   A holding company will be established in Tokyo, the global headquarters will be in Singapore, and regional offices will be located in Hong Kong; London; Richmond, Va.; and Sao Paulo, Brazil.
   All three carriers are members of “THE” Alliance, a vessel sharing agreement on major east-west trades that also includes Hapag-Lloyd, which finalized its merger with United Arab Shipping Company (UASC) in May, and Yang Ming.
   NYK will be the largest shareholder with 38 percent, while MOL and “K” Line will each hold a 31 percent share.
   “The distribution reflects NYK’s greater number of owned ships (active and on order) and terminals (10) that it is putting into the JV,” Drewry said. “Based on the same criteria, MOL might have expected to have gained a bigger share than K Line with a similar number of owned ships, but contributing more terminals (seven versus three).”
   Over the past five years, MOL has had the largest container-related revenues of the three carriers.
   Combined, the ONE carriers have seen annual container sales diminish by around 20 percent since the 2014 peak of $20 billion to $15.7 billion in calendar year 2016. From Q1 2015 through Q1 2017, the three carriers have suffered around $1 billion in collective operating losses from container operations.
   “It is these heavy losses that spurred the ONE lines to finally come together after years of speculation and seek the cost savings to reverse their fortunes,” Drewry said.
   Looking ahead, Drewry said that ONE will leapfrog Hapag-Lloyd to become the fifth largest container carrier by 2021, assuming there are no changes to the orderbook in terms of new orders or delivery days.