Merging the three Japanese container lines into ONE (2016)

The logic of scale, and shared beds with different dreams

This merger can be read as a decision that confronted head-on the nature of container shipping — a business in which it is hard to differentiate on anything but freight rates. Without scale you are excluded even from the frameworks that optimise deployment, and you are ground down in price competition; seeing that structure, and judging that none of them could face the world’s largest carriers alone, the three companies pooled their loss-making core into a single combined entity. It was a decision taken while the worst results in their history were bearing down on them, and its character was less an attacking move to seize an opportunity than a defensive one staking survival.

Yet making the combined company one did not make the intentions of the three owners riding on it one. The meaning of the merger was not the same for Kawasaki Kisen, which was letting go of its mainstay, as for NYK, which retained a broad base; the first-year loss, the negative spreads, and the stalled transfer of terminals all reflected how hard it is to run assembled businesses as a single body. Whether a Japanese container line that had obtained sixth place in the world could get past that starting point of shared beds and different dreams was left to the market cycle that followed and to how far apart the three chose to stand.