Japanese 3 Major Shipping Lines (NYK, MOL, K Line) announced on Oct. 31 that they will integrate their liner dept. (including the overseas terminal business) into one company in next July and the new company will start in April 2018 with the capital of 30 million yen (38% for NYK, 31% for MOL, 31% for K Line) operating the fleet size of 1.4 million TEU which will become No. 6 largest shipping line with 7% of global share.
Japanese 3 Major Shipping Lines have grown up as a general shipping line proud of the history of more than 100 years. They have led the world as a stable shipping company while they have been diversifying their business such as dry bulker, car carrier, liquid, oil tanker as well as containership. They are the company whom the leasing companies of the world are willingly to lease their containers. They are one of the most stable shipping companies judging from the financially asset soundness out of the shipping lines in the world. The lease charges payment adhered rigidly to 30th. Judging from my experience of the container lease company for 40 years, their payment for the container lease company had never delayed. It is because they found the utility value for a container lease company. That is the reason that they are high in popularity among leasing companies.
It is not too much to say that containerization which began in early 1970 in earnest were led by Japan. The export for North America accounted for 70% from Japan in the 1970s. On the other hand, container collected abroad and it is the mission for shipping lines and leasing companies how to return an overseas surplus containers to Japan. Leasing companies use to ask shipping lines to return back to Japan by paying the freight rate. Shipping companies used to prepare the special ship called a sweeper and returned them back to the demand places. Container demand in Japan was so strong. Thus, it is hard to be believed now. It is because export was prosperous from Japan.
It was a time that Japanese 6 Lines ((NYK, MOL, K Line, YS Line, Japan Line, Showa Line) were cheerful. In the 70s and 80s dozens of foreign shipping lines called at Japan ports. Their offices and their agents in Japan had big power for container leasing in Japan.
There were many branch offices and agencies of foreign shipping lines in Yurakucho neighborhood of Tokyo and “Kaigan-dori” in Yokohama. Thus, I used to spend one day to visit them. In addition, their branch office and agent at each port of Japan were a decision maker so that I used to visit 2~3 times a year at the port of Shimizu, Nagoya, Kobe and Moji. In the 80s there were container leasing companies more than 20 companies. Japanese shipping lines divided the leasing companies into the 2~3 priority groups. Container leasing companies could share their bookings according to their ranking from the top to the low when they had a demand. Therefore lease companies worked together in competition how they entered the top priority group.
Japan export share would be reduced according to the yen appreciation since 1985 and it is now 4~5%. In proportion to the yen appreciation container production has been shifting from Japan for the 70s and the mid-80s to Korea for 90s and to China in earnest after 2000. BRICS made a remarkable economic growth in 2000s, especially for China economically done in the epoch-making development. After Lehman shock, the force of BRICS has disappeared but China is quite an amazing country because they have still been changing and developing even now as my point of view about them since 90s when I had a chance to closely see from time to time. We must still keep an eye on them.
On the other hand, the chaotic order for containerships even with bigger ships made by foreign shipping lines and the investment funds has spurred shipping lines into the freight rate competition to the main global liner routes. Japanese 3 lines closely watched the bankrupt of Hanjin Shipping at the end of Aug and they could not be exceptional while other shipping lines are seeking for survival in the pursuit of the scale merit. It is a feeling whether a coming thing came. They expect the scale merit for a unification effect would be approximately 110 billion yen a year.
Fleet scale ranking of the World Shipping Lines (as of Oct 2016 by Kaiji Press)
No.1 Maersk Line 18％ 3,053,000 TEU
No.2 MSC 14% 2,680,000 TEU
No.3 CMA-CGM+APL 11% 2,172,000 TEU
No.4 COSCO＋CSCL 8% 1,555,000 TEU
No.5 Hapag-Lloyd+UASC 7% 1,471,000 TEU
No.6 NYK+MOL+K Line 7% 1,382,000 TEU
No.7 Evergreen 5% 983,000 TEU
No.8 Hamburg Sued 3% 598,000 TEU
No.9 OOCL 3% 573,000 TEU
No.10 Yang Ming 3% 561,000 TEU
Even if the combined Japanese 3 Lines’ fleet size of 1.4 million TEU become No. 6 largest shipping line with 7% of global share they compare far unfavorable with No.1 Maersk and No. 2 MSC. I think that it is important for the new shipping line should aim at No. 1 shipping lines positively to survive. It is not necessary for them to become actually No.1 but it is more important for them to get themselves up for seeking for No. 1. You can become the strong company if you pile up that it becomes No. 1 in a small segment.
It is not a mind theory but if they use the same type of ships and the terminal facilities of a port and a computer system backing them up you could not make it different. Therefore, it is “ Kizukai” translated to “warm-hearted consideration”, “Omoiyari“ for the mind caring about others that could make you step forward. I sincerely would like to request you to create the service value how you could earn shippers’ nomination and how to get them to load their cargo on your ships, which could be equal with the value of the actual freight rate. I think Japanese shipping lines could make it. Therefore, I would like to expect them for it.
The new container price in China has risen by 20% to $1,700 per 20f from last month. The number of the new containers in China factories seems to be 500,000 TEU middle now. Judging from my experience there appears a feeling of tightness of containers in the market when the factory stock becomes near 500,000 TEU. Probably it seems that half of factory stock of leasing companies would be already booked. The depot availability in China seems to be reduced down almost empty so that leasing companies have been stopping selling their old containers. Leasing companies have been impoverished under the rate competition as shipping lines these days. Therefore they cannot avoid the aggravation of the profit. In that case their financing becomes difficult from now on. If they could reflect it to the leasing charge of shipping lines there is not the problem. However, the circumstances of the shipping companies could not allow it, the leasing companies cannot but go to mergers and acquisitions on the pursuit of the scale sequentially for the time being. A choice may not be left other than the merger between further major lease companies at scale merit at the beginning of this year as a merger of Triton and TAL happened. It is necessary to watch the movements of the lease company closely.
However, the change is a chance in all ages. EFI try to get the companies understand the uniqueness of EFI in the changing world. We, EFI wants to help such companies grow successful and prosperous. That know-how is the trust of EFI.