K Line, MOL and NYK are joining hands! They are banking their future group profitability on the success of the Ocean Network Express (ONE) – the merger of the Japanese transport groups’ respective container businesses scheduled for April.
The trio say they expect to save ¥50bn ($440m) in costs in the first fiscal year ending 31 March 2019m and thereafter ¥110bn a year.
The synergies will come from personnel consolidation, combining agencies and subsidiaries and a lowest-common-denominator-reduction strategy on port costs and service provider fees.
In their traditional New Year messages to staff today, the presidents of K Line, MOL and NYK, Eizo Murakami, Junichiro Ikeda and Tadaaki Naito, spoke of the advantages of the integration and a “turning point” for their companies.
Feedback from shippers continues that they are being told by sales reps from the Japanese carriers that expiring contracts will be rolled over, with new deals stemmed to start from 1 April onwards.
After the merger, ONE will rank sixth in terms of global ranking by capacity with its combined 1.48m teu on 234 ships, above Evergreen’s 1.1m teu and just behind Hapag-Lloyd’s 1.56m teu. However, with a combined orderbook of some 187,000 teu, ONE could leapfrog Hapag-Lloyd, which has no ships on order.
Primary function for the new ONE ship planners will be to reduce costs by cutting out duplicated sailings, and there is likely to be a number of charter ships off-hired in due course.
