ONE is a boost to the trio of Japanese carriers and the container shipping market
The launch of Ocean Network Express (ONE) at the start of April will be positive for the market and has placed its carriers NYK, K Line and MOL in a strong position.
It has catapulted the three Japanese carriers into the top 10 global league at number six and created a fleet of 1.4M TEU. This will make them a much more powerful force. MOL chief executive officer Junichiro Ikeda said this would allow MOL to become a “leaner, stronger business enterprise”.
The Q4 2017 results of K Line and NYK show that this move was needed, as the former posted an ordinary loss for its container shipping operations and NYK reported a fall in its ordinary profit compared to Q3 2017. A factor for both was excess capacity causing weaker freight rates – something the Ocean Network Express will solve by consolidating capacity.
The launch of Ocean Network Express is also expected to help the container shipping market. VesselsValue analyst Court Smith said “The consolidation of commercial control of these ships should help rates in a market that is plagued by overcapacity.”
I believe that more consolidation will take place. 2018 will have the highest number of ultra large box ships deliveries on record – which could disrupt the delicate supply demand balance.
And as Mr Smith commented “We expect to see more interest in opportunistic mergers and acquisitions ahead as asset values remain cheap despite their recent gains and low earnings will encourage those with a weaker balance sheet to become willing sellers.”