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Japan shipping companies plan container merger

A ship from Japan's Nippon Yusen Image copyright Reuters

Three of Japan's biggest shipping companies are merging their container operations to become more efficient.

Nippon Yusen, Mitsui O.S.K. Lines and Kawasaki Kisen Kaisha said the joint venture would see savings of more than 110bn yen ($1bn; £820m) a year.

With a fleet of 256 container vessels, the proposed business would hold about 7% of the world shipping market.

Globally the shipping industry is suffering from overcapacity and weak economic growth.

That has left hundreds of ships standing idle and earlier this year led to the collapse of South Korea's Hanjin - the world's seventh largest container shipping firm.

A 'wave of consolidation'

The merged group, which would become the world's sixth largest container shipping operation by capacity, is expected to start operating in April 2018.

Shipping analyst Greg Knowler of IHS said the deal did not come as a complete surprise, given all carriers had reported some huge losses in the past past year or so.

"The quest for scale, and expectations that weak demand and excess capacity will continue for at least another two years, are driving the wave of consolidation that has swamped the liner shipping industry this year," he said.

The three Japanese companies said that "by strengthening the global organization and enhancing the liner network, the new joint-venture company aims to provide higher quality and more competitive services in order to exceed our clients' expectations".

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