Dive Brief:
- Ocean Network Express (ONE) won its last regulatory approval from South Africa this week, JOC.com reports.
- NYK, MOL and K Line announced they would merge as ONE last may, but encountered various regulatory setbacks: The U.S. Federal Maritime Commission passed the buck, and South Africa rejected the deal at first, before accepting it with conditions upon appeal.
- The green light makes ONE the sixth-largest ocean carrier. The Japanese carrier will launch its first 33 services in April, but start accepting bookings as early as February while it ties loose ends.
Dive Insight:
The last regulatory approval clears the way for another conclusion: the latest wave of ocean carrier consolidation is nearing its end.
The wave began with COSCO's merger with China Shipping in early 2016, and will likely end with COSCO's expected-to-close purchase of OOCL.
In that time, the four global shipping alliances were reduced to three — 2M + H, THE Alliance and Ocean Alliance — whose members are set to control more than 70% of capacity on East West trades once deals close.
With the Japanese lines' merger, now only Yang Ming Marine and Evergreen Line can claim more than 2% of market share or 500,000 TEUs in capacity. Unless Hapag-Lloyd or CMA CGM place their bets on these two major and already allied carriers, the next wave of deals in the ocean shipping industry will likely take place among regional carriers.
Top 6 ocean carriers by capacity, if all proposed deals are approved
| Rank | Company | Capacity (TEUs) | Market Share |
|---|---|---|---|
| 1 | A.P. Moller-Maersk | 3,444,025 | 16.4% |
| 2 | Mediterranean Shipping Co. | 3,081,196 | 14.7% |
| 3 | COSCO Shipping | 2,421,501 | 11.6% |
| 4 | CMA CGM | 2,359,493 | 11.2% |
| 5 | Hapag-Lloyd | 1,516,825 | 7.2% |
| 6 | Ocean Network Express | 1,436,502 | 6.9% |
| Total | 14,234,571 | 68% |
SOURCE: Alphaliner TOP 100, retrieved 7/9/2017
The formation of ONE — three rather minor Japanese carriers — conforms to the trend. Had NYK, K Line and MOL not merged, the carriers would have all been on the outside looking in on the wave of consolidation.
Instead, they can now be considered a powerhouse on East West trades and the second-largest partner in THE Alliance.
"With a global fleet of over 250 vessels, active participation in all major global trade lanes, deployment of the latest IT systems and an extensive terminal ownership portfolio," CEO Jeremy Nixon wrote in a December company newsletter, "ONE positions itself as being “large enough to survive, but still small enough to care."
The sixth largest carrier will call on 17 U.S. ports with its 23 services from Asia and Europe.
