The start of operations of the world’s newest container shipping line, Ocean Network Express, ONE, will be tested by its capability to harness synergies from the formerly-three liners it’s made up of, said online freight forwarder iContainers.
ONE is the result of an integration of the container operations of three Japanese shipping carriers, Kawasaki Kisen Kaisha, Ltd (K Line), Mitsui O.S.K. Lines, Ltd (MOL), and Nippon Yusen Kabushiki Kaisha (NYK), in an attempt to avoid a result similar to that of South Korea’s Hanjin Shipping. According to Alphaliner, ONE currently holds a market share of 6.9%.
iContainers says their combined resources will give them larger economies of scale to allow them to access new markets. But they will face the challenge of taking on a “new brand identity”. Klaus Lysdal, Vice President of Sales and Operations at iContainers, says:
Each carrier has its own strengths and weaknesses. So the trick will be to carry over the strengths. Obviously, with three company cultures coming together into one there will be some values that will change. Approaches and protocol will have to be set as the trio look to take on a brand new identity. This will cost them some clients, especially those who enjoyed a certain way of working with a certain carrier.
ONE was established in July last year and announced the official commencement of its businesses on 1 April 2018. The liner will operate a combined fleet size of 1,440,000 TEUs through around 230 vessels and offer 85 service loops which will call at over 200 of the world’s major ports in 100 countries. Through the merger, ONE is reportedly expected to cut around $440 million in costs in its first fiscal year of operations.
The industry will be waiting for the operational and financial results of this merger. But at first look, it’s safe to say that it makes a lot of sense for the three to come together and join forces instead risking it on their own.
There are more than just financial benefits to the merger. By working together as a combined entity, Mr Lysdal says that ONE should take this opportunity to adopting the best practices of each member.
Hopefully they’re able to clearly identify the strengths of each entity and harness the synergies created to refine their approach to clients. It’s now very much a matter of what style is adopted as the new company culture and what type of service they want to offer their clients.
