And then there was ONE (Ocean Network Express)..!!!!

As far as container shipping is concerned, the current decade or the period since Y2K has probably seen the most number of consolidations, mergers, acquisitions and alliances than any other period in container shipping history..

While it may not have been driven by the spectacular collapse of Hanjin Shipping (2016), the resolve by the container shipping lines to consolidate their position was most probably strengthened following the collapse..

New alliances in the form of Maersk Line and MSC’s 2M (with some space for Hyundai Merchant Marine), CMA-CGM, OOCL, Cosco and Evergreen’s The Ocean Alliance, Hapag Lloyd, MOL, NYK, Yang Ming Line, and K-Line’s THE Alliance all commenced their cooperation and operation in 2017..

Within these alliances, the members were already busy with their own growth plans with Maersk Line acquiring Hamburg Sud, Hapag-Lloyd acquiring UASC (after having already merged with CSAV), Cosco acquired OOIL the holding company of Orient Overseas Container Line (OOCL)..

If you wish to know more about Modern Shipping Mergers & Acquisition head over to Xeneta’s interactive visual timeline on shipping mergers and acquisitions which gives you a pretty good view of what happened in the industry since 1999..

One more JV (probably one of the last JVs among the bigger lines) was still left to be completed and and that was the plan by the 3 Japanese carriers Kawasaki Kisen Kaisha (K Line), Nippon Yusen Kabushiki Kaisha (NYK) and Mitsui O.S.K. Lines (MOL) to create a JV called ONE (Ocean Network Express)..

Shipping and Freight Resource OpinionBut that plan was jettisoned by the US Federal Maritime Commission (FMC), followed by the South African Competition Commission in mid-2017..

While the FMC’s grounds for the rejection were based on their lack of authority to review and approve mergers, the South African case was based on concerns of potential collusion as these very three lines were found to have been part of a price-fixing cartel in their RoRo business..

Ostensibly based on the confirmation that all regulatory approvals from all necessary countries were received (or would be received as the South African decision was being appealed), on the 7th of July 2017, a joint venture holding company was established in Tokyo bringing together the container divisions of these 3 Japanese giants to form ONE (Ocean Network Express), the world’s sixth-largest container liner shipping company..


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Finally on January 18, 2018, the Competition Commission of South Africa conditionally approved this joint venture paving the way for ONE to start trading..

The conditions set forth by the Competition Commission of SA precludes the JV from any collaboration on the RoRo businesses of these companies, exchange of sensitive information, shared directorship of the two business, sharing employees between the two businesses, to name a few..

ONE which will have its holding company in Tokyo and an operating company in Singapore, will operate 250 ships with a capacity of 1.38 million TEUs and will include the terminal operation businesses outside of Japan of all 3 companies..

NYK will have 38% share in the JV whereas K-Line and MOL will have an equal 31% share..

ONE will be unique from the other 3 major alliances in that, ONE more than just a strategic alliance and is not a cooperation agreement like the others..

With the creation of this JV and ONE expected to become operationally active very soon (around 1st of April 2018), will the container shipping industry take a breather as far as the consolidations, mergers and acquisitions are concerned..??

Nostradamus on shipping and freight

Well, no one really knows especially since there are not many other smaller global players left for the big boys to take over anymore..

Also, things are getting more and more difficult for the big boys in terms of acquisitions as has been seen from the various regulatory hurdles..

I mean, already all the lines involved in these consolidations, mergers and acquisitions (including ONE) account for around 80.7% of the global container shipping market share..!!!!!!!!!!!!!!!!!!!..

I think it is only fair that at least something (in this case 19.3%) is left for the rest of the world..

So for now at least, things seem to be settling down.. Or has it………………………?? Mr.Nostradamus..??


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6 comments on “And then there was ONE (Ocean Network Express)..!!!!”

  1. By Sarah Reply

    I am very grateful to have found this blog as I am new to the area. Enjoy reading the articles in my inbox and have found answers to queries I have had related to my work which helps a lot. Very informative and interesting. Thank you for the free downloads too! Much appreciated

  2. By capt TRajkumar Reply

    19th. Jan 2017
    Greetings for New Year-
    I have been in shipping since 1963 abd may mention.
    1) Shipping mergers and sell outs or Cartels never did much good ; Shipping just veered away and continued as the basic rule- Frt x Tonnes basis Cheapest . International Trade has no alternatives. Survival has been the only issue.
    2) Commericial shipping was a brilliant Research paper about 15 years ago from NI, by a friend of mine (we corresponded and met) Late Capt Robert Tallack of UK Nautical Institute which traced the path of Shipping-It tells a lot of this- (I was Chairman of NI Chennai Chapter then)
    3) Supremacy at Sea over Trade was fought by many (actually fought with cannon battles) esp 1400- 1800s till a Civil code came when the British emerged . They held sway for about 150 years and by 1976 the System broke up -inc Conference and liners and it swiftly dwindled for a Free for All-Mess. No rules No systems just Compete and Survive -Fact.
    4) Last 20 years since 1998 it has been only a story of Recession Speak blues and Majors went in for Giant ships and – where are we today?
    My view: ” Speculative till the Cargo : Tonnage/ Ships Ratio balances–bur we seem to be not likely to see this for some time. Add in the Sagar Mala Ports –too many and many ports starved too .
    Man hopes and Prays.
    Regards
    Capt.T Rajkumar
    JBBoda -Chennai

    • By Hariesh Manaadiar

      Thank you for sharing your nostalgia Capt.. Yes ultimately the model of shipping and global trade cannot and has not changed although the transport and delivery methods and sizes have changed.. 🙂

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