Dive Brief:

• The European Commission (EC) last week approved the Ocean Network Express (ONE) joint venture, proposed by Japan's top three container lines — Nippon Yusen Kabushiki Kaisha (NYK), Mitsui O.S.K. Lines (MOL) and Kawasaki Kisen Kaisha (K Line).
• The EC did not raise any concerns upon approval, citing the joint venture's "limited impact" on routes to and from Europe, and the significant competition that exists within the shipping industry.
• Not long after the approval, the shipping lines issued a joint press release to announce the companies had received "all necessary approvals" to establish ONE, and service would still begin by April 1, 2018.

Dive Insight:

The joint press release is a boast of confidence by the Japanese lines after suffering various setbacks, which includes missing an earlier, self-established target to begin joint operations by July 1.

The joint venture, ONE, seeks to create the sixth largest global shipping company by combining the shipping capacity and foreign terminal operations of Japan's three largest container lines. The move is widely seen as necessary to remain competitive in a rapidly consolidating shipping industry. Without a merger, the Japanese lines risk being crowded out of East-West trade lanes due to a lack of economies of scale.

However, two countries' regulators had raised concerns over the merger, delaying the Japanese lines' plans. In South Africa, regulators rejected the proposal outright, citing previous cases of collusion by the three companies, albeit in the roll-on, roll-off business. In the U.S., the Federal Maritime Commission ruled it could not approve the proposal, as it was more of a merger than an operational alliance, and therefore deferred the decision to the U.S. Department of Justice.

The two events raised concerns that the proposal may fail to pass muster with global regulators, but ONE remained optimistic. The EC's unconditional approval provides a beacon of hope for the lines and observers. In addition to the EU, ONE has also been approved in Singapore. Apparently, according to the shipping lines' recent press release, this is enough to commence their joint venture.