The merger of the container shipping assets of Mitsui OSK, NYK and K-Line may require regulatory approval. Panjiva data shows that the combined shippers’ share of U.S.-bound volumes is similar to that of CMA-CGM. There may be concerns about their share of Japan to U.S. west coast (58%) and east coast (68%) routes, as well as other Asia-to-U.S. routes. Furthermore, a combination of their port assets will give them positions in 10 of the 14 largest U.S. ports, as well as consolidating positions in the Los Angeles/Long Beach complex.

 

The proposed merger of the container shipping and non-Japanese port assets of Mitsui OSK, Nippon Yusen KK, and Kawasaki Kisen Kaisha discussed in Panjiva research of October 31, raises questions about regulatory approvals. For example, container alliances typically have to be approved by the Federal Maritime Commission.

Looking specifically at U.S.-bound routes, the market share of the new company (‘Newco’, or perhaps MOLNYKKKK) on the basis of TEUs handled will be similar to that of CMA-CGM after its merger with Neptune Orient, Panjiva data shows. It’s growth has been similar to the market overall, suggesting the three companies have not been aggressively pursuing market share over the past three months when taken at the aggregate.

Data shown for three months total to September 30 2016. Horizontal axis shows share of total shipments where SCAC is listed, vertical for growth on a year earlier. Newco combines NYK, K-Line and Mitsui-OSK data Source: Panjiva

There may be concerns about specific routes. In September the three combined handled 58.2% of Japan to U.S. west coast traffic and 67.9% of Japan to U.S. east coast traffic. The pickup in its share of Japan-based routes in August and September is understandable given Hanjin Shipping’s problems. The jump in Japan-to-East Coast routes also reflects declines in the number of voyages across all carriers despite the expansion of the Panama Canal. They also had significant shares in Hong Kong and Singapore to west coast U.S. traffic too, though the share of Singapore traffic has fallen to 21.3% from 28.6% a year ago.

Data for three Japanese shippers combined, segmented by routes. EC represents all east coast ports including gulf coast. WC represents west coast ports. Source: Panjiva

Another concern that the authorities may have is port ownership. Whilst the newco will not own ports outright, it will own significant assets at 10 of the 14 biggest ports. There will also be a significant consolidation of port assets owned in Los Angeles and Long Beach by the three. Additionally, the mix of east coast assets owned by NYK and the west coast assets of K-Line, Mitsui OSK and NYK may lead to concerns about geographic reach.

Data shown for ports in aggregate, whereas shippers will only own isolated facilities at the ports.  Source: Panjiva

 

This post was first published in the Panjiva Daily, which features global trade news and data-driven insights and is free for all Panjiva subscribers. To find out more email sales@panjiva.com.