Need for cost competitiveness driving Japanese container line merger

Need for cost competitiveness driving Japanese container line merger

Cost competitiveness is the driving force behind the merger of Japan’s big three shipowners container line businesses, according to K Line president Eizo Murakami.

NYK, Mitsui OSK Lines and K Line plan to merge their container line businesses from 2018, a move which followed all three companies joining THE Alliance on the main east –west trades.

“However, given the current business environment, in which competitors cannot be defeated without significantly higher cost competitiveness, we decided to go one step further by integrating our businesses in the spirit of ‘three companies operating on equal footing’,” Murakami, who is also ceo of K Line, said in his 2017 New Year address.

“Our new containerships business strategy for the future will be as follows: To fight equally with overseas competitors that pursue economics of scale by applying cost competitiveness generated from the size of our combined fleets and integrated systems together with the sales competitiveness each of us has developed over the years,” he stated.

“From this integration a business framework capable of generating profits even when market conditions are as bad as they are now will be established.”

NYK president Tadaaki Naito stressed the ability to draw of the best practices of all three companies.

“Our objective for the joint-venture company is to maximize its competitiveness by drawing on the best practices and outstanding aspects of all three companies. We shall further enhance the effectiveness of our systems and operations by adopting the superior ones used at NYK,” Naito said in his New Year message.

Commenting the merger in his New Year message Mitsui OSK Lines ceo Junichiro Ikeda said: “Let me stress again that the containership business will remain our core business. Of course, we will continue to offer reliable services to customers until the new containership company starts operation.”

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