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Start Date Set for Japanese Carrier Merger

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Kawasaki Kisen Kaisha (K Line), Mitsui OSK Lines (MOL), and Nippon Yusen Kabushiki Kaisha (NYK) have set the launch date for a new joint venture that will operate under the tradename 'Ocean Network Express' on April 1, 2018.

The venture plans to merge the three companies’ container shipping and worldwide terminal operation businesses, excluding those in Japan, as previously announced in a notice of the agreement on October 31, 2016.

It is still not clear if the US is prepared to accept the agreement as the Federal Maritime Commission (FMC) recently threw out an application by the three carrier lines.

The FMC stated that the reason was “due to the tripartite agreement falling outside the jurisdiction of the Shipping Act of 1984”.

As a single merged company, it would be the world’s sixth biggest container operator and represent a 7% share of the global market.

It is estimated that the three Japanese ocean carrier lines will save approximately US$1 billion each year.

Establishment of a holding company is currently planned in Japan, and an operating company is planned to be incorporated in Singapore.

In addition, regional headquarters of the operating company will be set up in Singapore, Hong Kong, United Kingdom (London), United States (Richmond, VA), and Brazil (Sao Paulo).

An announcement by K Line said: “The move will allow Ocean Network Express to better meet customers’ needs by providing high-quality, competitive services through the consolidation and enhancement of the three companies’ global network and service structures.

“The establishment of new joint venture will officially be announced once all anti-trust reviews are completed.”

The merger may be able to help NYK Line and K Line return to profitability after the two carrier lines suffered multi-million dollar losses in the first nine months of the fiscal year beginning April 1, 2016.

After it reported a $168 million profit at the start of 2017, MOL set out a plan to increase the figure to US$1.337 billion to $1.782 billion by 2027 through improvements across all segments of the business, especially in containership operations.

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